By Sara Sjolin and Michael Kitchen, MarketWatch
LONDON (MarketWatch) — Oil futures dropped to the lowest level in almost a month on Friday as a key meeting of the Organization of the Petroleum Exporting Countries (OPEC) got under way in Vienna.
Crude for July delivery CLN3 -0.57% lost 77 cents, or 0.8%, to $92.84 a barrel, pausing from a 0.5% advance in Thursday’s New York Mercantile Exchange session.
July futures for rival benchmark Brent crude oil UK:LCON3 -0.49% fell 58 cents to sit at $101.61 a barrel, after moving sideways Thursday.
One key issue at the OPEC meeting was likely to involve the boom in U.S. and Canadian shale oil. The issue has caused a split within OPEC, as it has had a relatively small impact on Gulf nations, such as Saudi Arabia, but has hurt African OPEC members, such as Nigeria, which produces oil of a similar grade to North American shale.
Still, some oil-market participants saw the OPEC summit as unlikely to drive prices much.
Citi Futures analysts agreed that OPEC would very probably keep their production quota steady at 30 million barrels a day, “a level that would result in a relatively balanced market over the second half of the year.”
Crude for July delivery CLN3 -0.57% lost 77 cents, or 0.8%, to $92.84 a barrel, pausing from a 0.5% advance in Thursday’s New York Mercantile Exchange session.
July futures for rival benchmark Brent crude oil UK:LCON3 -0.49% fell 58 cents to sit at $101.61 a barrel, after moving sideways Thursday.
One key issue at the OPEC meeting was likely to involve the boom in U.S. and Canadian shale oil. The issue has caused a split within OPEC, as it has had a relatively small impact on Gulf nations, such as Saudi Arabia, but has hurt African OPEC members, such as Nigeria, which produces oil of a similar grade to North American shale.
Still, some oil-market participants saw the OPEC summit as unlikely to drive prices much.
Citi Futures analysts agreed that OPEC would very probably keep their production quota steady at 30 million barrels a day, “a level that would result in a relatively balanced market over the second half of the year.”
But the analysts questioned how closely the OPEC members would follow the bloc’s production limits, as “the recent increase in actual production calls the commitment to limiting output into question.”
“Poor compliance could add to what had looked like a [900,000 barrel-per-day second-quarter] surplus and result in a smaller ongoing surplus instead,” they wrote late Thursday.
Citi Futures is currently advising clients to hold a short position on Nymex crude with a $95.30 buy-stop.
On Friday, manufacturing data from the Chicago region is out, along with updates on U.S. consumer spending and consumer sentiment.
Also on the oil-market horizon are official China manufacturing data, due out Saturday. A key factor in the government-sponsored Purchasing Managers Index will be whether the data matches preliminary results from a privately compiled version from HSBC and Markit, which showed Chinese manufacturing activity contracting in May.
“Manufacturing PMIs are expected to weaken in the USA, the biggest oil consumer, and also in China, the country with the strongest growth momentum. This could disappoint speculative investors, who have increased their net long positions again in recent weeks,” analysts at Commerzbank said in a note.
Elsewhere in the energy complex, natural gas for July delivery NGN13 +0.30% was slightly down at $4.02 per million British thermal units.
The mild loss marked a deceleration from a 3.8% plunge Thursday on the back of Energy Information Administration data showing a rise in U.S. inventories last week.
June gasoline RBM3 -0.12% was steady at $2.81 a gallon. The contract was due to expire at the end of floor trading Friday.
June heating oil slipped 2 cents, pr 0.8% to $2.82 a gallon.
