BLBG:Oil Heads for Weekly Decline Before Europe Accord, OPEC Meeting
Oil fell in New York, heading for the biggest weekly decline since September, as investors speculated that fuel demand will falter amid signs Europe is struggling to tame its sovereign debt crisis.
Futures slid 0.6 percent after dropping the most in three weeks yesterday as European Central Bank President Mario Draghi signaled the ECB won’t increase government bond purchases to end the crisis. Saudi Arabia, the world’s biggest crude exporter, is in no rush to agree to a new OPEC quota at the group’s Dec. 14 meeting, Oil Minister Ali al-Naimi said.
“Europe is the driving feature of all these risk markets,” said Ric Spooner, a chief analyst at CMC Markets in Sydney. “The obvious implications for all commodity markets is if we’re going to continue to have poor confidence levels, then that’ll impact negatively on world demand and has the potential to soften prices.”
Crude for January delivery dropped as much as 62 cents to $97.72 in electronic trading on the New York Mercantile Exchange and was at $97.81 at 2:31 p.m. Sydney time. The contract yesterday fell $2.15, or 2.1 percent, to $98.34, the lowest settlement since Nov. 28. Prices are down 3.1 percent this week, the most since the period ended Sept. 23. Futures are 7 percent higher this year after climbing 15 percent in 2010.
Brent oil for January settlement declined 96 cents, or 0.9 percent, to $107.15 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate was at $9.34, compared with $9.77 yesterday and a record $27.88 on Oct. 14.
Europe, OPEC
The ECB’s bond purchase program is “neither eternal nor infinite,” Draghi said at a press conference in Frankfurt yesterday. European leaders meet in Brussels for a second day today to try to agree on a deal that will restore bondholders’ confidence and make it possible for the ECB and International Monetary Fund to step up contributions to the rescue effort.
Japan today said its economy grew less than the government’s initial estimate last quarter as companies reduced investment on concern overseas demand was stalling.
The Organization of Petroleum Exporting Countries will probably fail to agree on new production quotas at its meeting as Saudi Arabia pumps crude at the fastest rate in more than 30 years and Iran faces losing customers because of European sanctions, according to analysts surveyed by Bloomberg.
Saudi output will be determined by “whatever the customers want,” al-Naimi said yesterday in Durban, South Africa. The nation wants spare oil-production capacity of 1.5 million to 2 million barrels a day, he said.
Iran Sanctions
European Union governments will consider imposing stiffer sanctions on Iran amid “serious and deepening concerns” over the country’s nuclear program, according to a draft EU summit statement before a final version is issued today. Foreign ministers will decide on the next set of sanctions on Jan. 30, the statement said. Japan’s Cabinet also approved a plan to impose additional sanctions against Iran, Kyodo News reported.
Iran pumped about 5 percent of the world’s crude output last year, BP Plc’s Statistical Review of World Energy shows. The nation is next to the Strait of Hormuz, through which about a fifth of the world’s supply of the commodity is transported, according to the U.S. Energy Department. The EU accounted for about 16 percent of global oil demand last year and Japan consumed 5 percent, while the U.S., the biggest user, accounted for 21 percent.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net
