BLBG:Crude Drops From One-Week High in New York Before OPEC Meeting
Oil fell from a one-week high in New York amid speculation that the Organization of Petroleum Exporting Countries will set an output ceiling near current production levels at a meeting in Vienna today.
Futures declined as much as 0.5 percent, after surging 2.4 percent yesterday in the biggest gain in almost four weeks. OPEC members agreed they should set a limit for the first half of next year of 30 million barrels a day, said a delegate who asked not to be identified. U.S. crude supplies rose last week and a measure of gasoline consumption dropped, according to the industry-funded American Petroleum Institute.
“All eyes will be on the OPEC meeting today, but no drama is expected,” said Filip Petersson, commodity strategist of SEB AB, in Stockholm. “The production cap seems quite neutral since demand is likely to be held back by weaker growth in the first half of next year, so some of the bullishness from yesterday is dissipating.”
Crude for January delivery declined as much as 51 cents to $99.63 a barrel in electronic trading on the New York Mercantile Exchange. It was at $99.78 at 8:50 a.m. London time. Yesterday, the contract gained $2.37 to $100.14, the highest settlement since Dec. 7. Prices are up 9.2 percent this year after climbing 15 percent in 2010.
Brent oil for January settlement on the London-based ICE Futures Europe exchange was at $109 a barrel, down 50 cents. The contract expires tomorrow. The more-actively traded February future lost 51 cents to $108.57. The European benchmark was at a premium of $9.22 to New York-traded West Texas Intermediate grade. The spread was a record $27.88 on Oct. 14.
OPEC Output
OPEC’s 12 members pumped 30.355 million barrels a day of crude last month, according to a Bloomberg survey of producers and analysts. The group will need to ship 30.1 million barrels a day next year to balance global supply and demand, its secretariat said yesterday in a monthly report. The International Energy Agency estimates 30.2 million barrels a day is required.
Crude stockpiles in the U.S., the world’s largest oil consumer, rose 462,000 barrels last week to 334.6 million, the API said yesterday. An Energy Department report today will probably show supplies fell 2.5 million barrels, based on the median estimate of 12 analysts surveyed by Bloomberg News.
Gasoline inventories slid 12,000 barrels last week, the API report showed. Supplies are likely to have increased 1.2 million barrels, according to the Bloomberg survey. Implied demand for the motor fuel declined 2.1 percent to the lowest since August, the API said.
Bollinger Band
Oil in New York has technical support along the middle Bollinger Band, close to the intraday low of the past three days, according to data compiled by Bloomberg. This indicator is around $98.25 a barrel today. Buy orders tend to be clustered near chart-support levels.
Crude surged as much as 3.6 percent yesterday after the state-run Fars news agency said Iran will hold drills to practice shutting the Strait of Hormuz. About 15.5 million barrels a day, or a sixth of global oil shipments, is transported through the waterway, according to the U.S. Energy Information Administration.
Closing the strait to shipping is not on Iran’s agenda, the state-run Al Alam news channel reported today, citing the Iranian Foreign Ministry. Iran believes the region needs stability and calm, ministry spokesman Ramin Mehmanparast said, according to the channel’s website.
Iran, OPEC’s second-biggest producer after Saudi Arabia, supplied about 5 percent of the world’s crude last year, according to BP Plc’s annual Statistical Review of World Energy.
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
