MW:Oil stays below $93 as OPEC keeps output target
By Sara Sjolin and Michael Kitchen, MarketWatch
LONDON (MarketWatch) — Oil futures dropped to the lowest level in almost a month on Friday after the Organization of the Petroleum Exporting Countries (OPEC) kept its production target unchanged at a much-anticipated meeting in Vienna.
Crude for July delivery CLN3 -0.69% lost 70 cents, or 0.8%, to $92.89 a barrel, undoing a 0.5% advance in Thursday’s New York Mercantile Exchange session.
July futures for rival benchmark Brent crude oil UK:LCON3 -0.65% fell 58 cents to sit at $101.61 a barrel, after moving sideways Thursday.
Prices stayed lower, after OPEC oil ministers at a summit in Vienna agreed to keep the group’s output target at 30 million barrels a day, with many members expressing satisfaction with current price levels.
Ahead of the meeting, market participants discussed whether the organization would cut production targets to sustain higher oil prices, after a 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.
The rise in U.S. shale-oil production saw U.S. crude inventories rise to their highest level in more than 80 years on Thursday and is feared among some OPEC nations to reduce the demand for their oil. In April 2012, the output from OPEC exceeded the target by 1.6 million barrels a day, but the surplus narrowed to 460,000 barrels a day last month.
Most analysts expected the group to maintain the 30-million-barrels-a-day output target, with Citi Futures analysts suggesting ahead of the meeting that the level “would result in a relatively balanced market over the second half of the year.”
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.
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 +0.57% was up 3 cents at $4.05 per million British thermal units.
The mild gain marked a small recovery 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 -0.27% was off 1 cent at $2.81 a gallon. The contract was due to expire at the end of floor trading Friday.
June heating oil slipped 2 cents, or 0.5% to $2.83 a gallon.
