Brent crude fell for a second day as investors weighed the likelihood that OPEC will reduce output when it meets next week amid signs of weakening global demand. West Texas Intermediate was steady in New York.
Futures dropped as much as 0.6 percent in London. Venezuela, one of 12 members of the Organization of Petroleum Exporting Countries, met with Russia to discuss ways to support oil prices, said the foreign ministry in Caracas. A large production cut isn’t in OPEC’s interest because that will bolster an expansion in U.S. shale supply, according to Goldman Sachs Group Inc.
Oil has slumped into a bear market as the U.S. pumps at the fastest pace in more than three decades, fueling speculation that the market is oversupplied. Japan, the world’s third-biggest consumer, slid into a recession after its economy shrank in the third quarter. OPEC, responsible for about 40 percent of global supply, is scheduled to gather Nov. 27 in Vienna.
“More investors are now assuming that OPEC producers are unlikely to cut output,” Hong Sung Ki, an analyst at Samsung Futures Co. in Seoul, said by phone today. “There are still a lot of uncertainties. All eyes are on the OPEC meeting.”
Brent for January settlement fell as much as 46 cents to $78.85 a barrel on the London-based ICE Futures Europe exchange and was at $79.03 at 4:06 p.m. Singapore time. It dropped 10 cents to $79.31 yesterday. The volume of all contracts traded was about 17 percent below the 100-day average. Prices have decreased 29 percent this year.
‘Coordinating Action’
WTI for December delivery was 12 cents lower at $75.52 a barrel in electronic trading on the New York Mercantile Exchange. The more-active January future was down 7 cents at $75.59 today. The U.S. benchmark crude was at a discount of $3.45 to Brent for the same month.
Venezuela’s Rafael Ramirez and Russia’s Alexander Novak discussed “coordinating action” to defend the market, the foreign ministry said in a statement. Iranian Oil Minister Bijan Namdar Zanganeh is preparing to visit the United Arab Emirates this week, according to Shana, the Tehran-based oil ministry’s news service.
While the slide in prices into a bear market increases the chances of a production cut, slowing output by more than 500,000 barrels a day would mean further reductions are needed from 2016 and beyond, Goldman analysts including Jeffrey Currie said in an e-mailed report. Leading OPEC members such as Saudi Arabia have resisted calls to decrease supply while Venezuela, Libya and Ecuador are seeking action to support prices.
In the U.S., the world’s largest oil consumer, crude stockpiles probably declined by 1 million barrels to 377.5 million last week, according to the median estimate in a Bloomberg News survey of seven analysts before an Energy Information Administration report tomorrow. That would be the lowest level in five weeks.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Sharon Cho in Singapore at ccho28@bloomberg.net
To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Aaron Clark, Yee Kai Pin
