Friday 29 Mar 2024
By
main news image

(Nov 7): Brent headed for a seventh weekly drop as the Organization of Petroleum Exporting Countries predicted it will need to supply less crude amid the U.S. shale boom. West Texas Intermediate fell in New York.

Futures slid as much as 0.7 percent in London and are down 4 percent this week. OPEC reduced every forecast for its crude through 2035 except next year, according to the group’s annual World Oil Outlook. Libya plans to resume production from its biggest field that was halted after an attack, an official said.

Oil has slumped into a bear market amid signs that global supply is outpacing consumption. Leading OPEC members have resisted calls to cut output as they compete with the U.S., which is pumping at the fastest pace in more than 30 years.

“It will take a threat to a significant chunk of production to really alter things,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone today. “A geopolitical event would be a catalyst for a rally.”

Brent for December settlement declined as much as 54 cents to $82.32 a barrel on the London-based ICE Futures Europe exchange and was at $82.40 at 4:05 p.m. Sydney time. The contract lost 9 cents to $82.86 yesterday. The volume of all futures traded was about 21 percent below the 100-day average. Prices have decreased 26 percent in 2014.

WTI for December delivery dropped as much as 36 cents, or 0.5 percent, to $77.55 a barrel in electronic trading on the New York Mercantile Exchange. Prices are down 3.7 percent this week. The U.S. benchmark crude was at a discount of $4.80 to Brent, compared with $5.32 on Oct. 31.

Crude Demand

Global demand for crude from OPEC, which is responsible for about 40 percent of the world’s supply, may fall to a 14-year low of 28.2 million barrels a day in 2017, its outlook showed. That’s 600,000 a day less than last year’s projection and 800,000 below the amount required this year.

Oil will rebound by the second half of next year as supply and demand don’t justify the market’s collapse and prices are low enough to threaten investment in production, according to OPEC Secretary-General Abdalla El-Badri. The 12-member group, scheduled to meet Nov. 27 in Vienna, is “concerned but not panicking,” he said yesterday.

OPEC will probably reduce its output quota if oil slides to $70 a barrel, the Wall Street Journal reported, citing officials it didn’t identify. The group produced 30.974 million barrels a day last month, the most since August 2013, data compiled by Bloomberg show. That exceeded its collective target of 30 million, which was set in January 2012.

Sharara Field

In Libya, where output gains have contributed to rising supply from OPEC, the Sharara field will “soon” resume, said Mansur Abdallah, the director of oil movement at the Zawiya refinery and port. It was pumping 290,000 barrels a day before being shut as a precaution as gunmen stormed the compound.

U.S. crude production expanded to 8.97 million barrels a day through Oct. 31, the Energy Information Administration said on Nov. 5. That’s the most in weekly data going back to January 1983, according to the Energy Department’s statistical arm.

WTI may climb next week, a Bloomberg News survey shows. Sixteen of 34 analysts and traders, or 47 percent, estimated futures will increase through Nov. 14, while nine respondents predict a price decline.

 

      Print
      Text Size
      Share