EG: Crude Oil Prices Fall Sharply as OPEC Meeting Awaited
Crude oil prices fell sharply once again on Monday morning as traders are still looking for any indication that producers will take action to curb the amount of oil flowing into the market.
Despite the fall, oil remains within a trading range established at the end of last week. Oil prices are likely to drift sideways over the coming days as the market awaits the outcome of a Nov. 27 meeting of the Organization of the Petroleum Exporting Countries, the cartel that controls much of the world's oil production, according to Adam Longson, an analyst at Morgan Stanley.
This is despite factors that could be expected to push prices higher. "Libyan production has disappointed of late with more signs of trouble," such as the shut-in of the Sharara field, Mr. Longson wrote in a note to clients. Less supply from Libya could be expected to push prices higher, but so far there has been no reaction.
Mr. Longson said that given a glut of oil since the summer, prices may not move higher without intervention from the cartel. But he sees prices firming in the first half of 2015, as he expects cold weather in the northern hemisphere to drive up consumption and OPEC perhaps to reach an agreement to trim production.
Latest forecasts from the International Energy Agency, however, point to lower prices next year. David Hufton, an analyst at PVM, said that "even this most bullish of organizations believes that 'downward price pressures could build up further in the first half of 2015.' "
The IEA noted that China has helped mop up excess oil by stockpiling reserves, but it now appears to have run out of storage space. That suggests even more oil will find its way onto the open market.
Brent crude for December delivery is down $1.21 at $78.19 a barrel on ICE Futures Europe. WTI is down 87 cents at $74.95 on the New York Mercantile Exchange.
Recently, ICE gasoil for December changed hands at $697.25 a metric ton, down 75 cents. Gasoline was down 293 points to $2.0132 a gallon.
Write to Cassie Werber at cassie.werber@wsj.com
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