BLBG:Brent Oil Snaps Two-Day Gain as Europeans Seek Greek Deal
Brent crude halted a two-day advance in London before European finance ministers meet to discuss aid for Greece amid concern that the region’s debt turmoil will constrain fuel consumption.
Futures dropped as much as 0.8 percent as ministers prepare to assess whether the latest round of cuts agreed by Greece are sufficient to warrant further assistance. Saudi Arabian Oil Minister Ali al-Naimi said that prices, down 15 percent in London from this year’s peak, are “good.” U.S. oil output is poised to surpass Saudi Arabia’s in the next decade, the International Energy Agency said. Hedge funds and large speculators cut bullish bets on West Texas Intermediate crude to the lowest in more than two years.
“We are no closer to a comprehensive solution for Europe,” said Guy Wolf, a strategist at London-based commodities broker Marex Spectron Group Ltd., who predicts oil prices will recover in the first quarter. “While Europe remains a source of concern for the market, the global growth outlook has improved.”
Brent for December settlement on the London-based ICE Futures Europe exchange was at $109.10 a barrel, down 30 cents, as of 11:15 a.m. local time. The European benchmark crude was at a premium of $23.25 to New York-traded contracts. The spread was $23.33 on Nov. 9, the widest since Oct. 30.
Crude for December delivery dropped 49 cents to $85.58 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 98 cents to $86.07 on Nov. 9, the highest close since Nov. 6. Prices are down 13 percent this year.
Saudi Arabia
The oil market is “comfortable” and “balanced,” al- Naimi told reporters in Abu Dhabi yesterday. Consumers are also happy with prices, he said, adding that the kingdom produced 9.7 million barrels a day in October.
Europe’s finance chiefs gathering at 5 p.m. in Brussels intend to prevent a 5 billion-euro ($6.4 billion) Greek bill redemption on Nov. 16 from triggering an accidental default, while they’re unlikely to ratify a 31.5 billion-euro payment to Greece that has been frozen since June, a European official said Nov. 9.
Growing supplies of crude extracted through new technology including hydraulic fracturing of underground rock formations will transform the U.S. into the largest producer for about five years starting about 2020, the IEA said today in its annual World Energy Outlook.
“The self-sufficiency story for the U.S. is not only given by the growth in oil production, but also the steps taken to reduce oil consumption in the transport sector,” Fatih Birol, the IEA’s chief economist, said today at a press conference in London.
China Exports
Crude in New York remains in a downtrend channel on the daily chart, signaling last week’s rebound may not be sustained, according to data compiled by Bloomberg. Futures have traded between the middle and lower Bollinger Bands for more than seven weeks. These indicators, representing technical resistance and support levels, are about $88.50 and $83 a barrel today.
China’s overseas shipments climbed 11.6 percent from a year earlier, the General Administration of Customs said Nov. 10 in Beijing. That’s higher than a 10 percent estimate in a Bloomberg News survey and was the fastest rate since May. Industrial production was up 9.6 percent in October from a year earlier, the National Bureau of Statistics said Nov. 9.
Net crude imports rose to 5.52 million barrels a day in October, also the highest level since May, the data showed. China is the world’s biggest oil consumer, after the U.S.
Hedge funds and other speculators cut bullish bets on crude as demand declined after Hurricane Sandy, production increased to the highest since 1994 and U.S. President Barack Obama won re-election.
Money managers reduced net-long positions, or wagers on rising prices, to 122,309 futures and options combined in the seven days ended Nov. 6, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Nov. 9. That’s the lowest since the week to Sept. 28, 2010.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
