Oil fell for the third time in four days as ministers from the Organisation of Petroleum Exporting Countries (Opec) arrive in Vienna to discuss production policy.
Futures dropped as much as 0.9 per cent to stay below $42 a barrel in New York. Saudi Arabia will consider all issues at the Friday gathering and listen to the concerns of other group members, Oil Minister Ali Al Naimi said. US crude inventories probably declined for the first time in 10 weeks, a Bloomberg survey showed before Energy Information Administration data Wednesday.
Oil has slumped 37 per cent since Saudi Arabia led Opec’s decision in November last year to maintain output and defend market share against higher-cost shale producers. Iranian Oil Minister Bijan Namdar Zanganeh sent a letter to the group calling for a cut in excess supply, according to Mehr news agency. Crude stockpiles in the US, the world’s biggest consumer, have risen to almost 120 million barrels above the five-year seasonal average level.
“There’s no evidence at this stage that members within Opec are moving toward a scenario that will see Saudi Arabia back away from its strategy,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. “Until we see some sort of shift on the supply side of the equation, the improvement in sentiment around demand is not having much of an impact.”
West Texas Intermediate (WTI) for January delivery lost as much as 36 cents to $41.49 a barrel on the New York Mercantile Exchange and was at $41.53 at 3:45pm Singapore time. The contract gained 20 cents to $41.85 on Tuesday. Total volume was about 36 percent below the 100-day average. Prices decreased 11 per cent in November, the most in four months.
Brent for January settlement was down 21 cents at $44.23 a barrel on the London-based ICE Futures Europe exchange. It slid 0.4 per cent to $44.44 on Tuesday, closing lower for a fourth day. The European benchmark crude was at a premium of $2.70 to WTI.
Opec’s 12 members pumped above their collective production target of 30 million barrels a day the past 18 months, data compiled by Bloomberg show. Venezuela has called for a supply reduction while Libya has signaled plans to expand output ahead of the Vienna summit, the group’s first ministerial meeting since June.
When asked if Saudi Arabia will stick to its strategy of defending against competing supplies, Al Naimi told reporters on Tuesday: “Who said we are keeping market share strategy? Did I ever say?”
US crude inventories probably shrank by 800,000 barrels through November 27, from 488.2 million in the prior week, according to the median estimate in the Bloomberg survey of analysts. Refinery rates are projected to have increased by 0.5 percentage points to 92.5 per cent of capacity.