By Grant Smith and Ben Sharples
Dec. 3 (Bloomberg) — Brent crude traded near $70 a barrel, erasing earlier gains as traders evaluated the impact of OPEC’s decision to maintain output at last week’s meeting. West Texas Intermediate was little changed.
Futures pared advances of as much as 1.3 percent in London and 1.6 percent in New York. The global benchmarks fell 18 percent last month after the Organization of Petroleum Exporting Countries maintained its output target at 30 million barrels a day, opting to let low oil prices force U.S. shale producers to cut supply. Saudi Arabia won’t give up market share “at this time for anybody,” said Prince Turki Al-Faisal, the kingdom’s former intelligence chief.
Demand growth is slowing as the U.S. pumps the most oil in more than three decades, driving crude into a bear market. OPEC, responsible for about 40 percent of the world’s supply, resisted calls from members including Venezuela to reduce its quota at the Nov. 27 meeting in Vienna.
“The market is still trying to find its feet following the OPEC meeting last week,” Jens Naervig Pedersen, a commodities analyst at Danske Bank A/S, said by e-mail from Copenhagen today. “There seems to be some short-term support around the $70 to $72-a-barrel mark for Brent. But overall the market is still plagued by uncertainty.”
Brent for January settlement slipped 17 cents to $70.37 a barrel on the London-based ICE Futures Europe exchange, having earlier climbed 92 cents to $71.46. It dropped $2 yesterday to $70.54. The European benchmark crude traded at a premium of $3.42 to WTI. Prices are down 36 percent this year.
WTI for January delivery climbed as much as $1.09 to $67.97 a barrel in electronic trading on the New York Mercantile Exchange, before paring the increase to $67.06. The contract declined $2.12 to $66.88 yesterday. Total volume traded was in line with the 100-day average for the time of day.
U.S. crude inventories shrank by 6.5 million barrels last week, the industry-funded American Petroleum Institute reported yesterday, according to Anthony Headrick, an analyst at CHS Hedging. An Energy Information Administration report today may show supplies expanded by 1.75 million, the median estimate in a Bloomberg News survey of eight analysts shows.
Production in the U.S., the world’s biggest oil consumer, increased to 9.08 million barrels a day through Nov. 21, said the EIA, the Energy Department’s statistical arm. That’s the fastest pace in weekly records that started in January 1983.
Oil producers outside OPEC are “drowning” the market, Kuwait’s Oil Minister Ali al-Omair told parliament, according to the state news agency Kuna. The country won’t take a unilateral decision to boost prices or sacrifice its interests by cutting output, he said.
Iraq, OPEC’s second-largest producer, reached a deal with Kurdish authorities to export oil through Turkey. It will ship as much as 550,000 barrels a day from northern Iraq to the Mediterranean port of Ceyhan along a pipeline operated by the Kurds, according to Safeen Dizayee, a spokesman for the Kurdish Regional Government. The pact will entrench the global supply surplus, predicted BNP Paribas SA.
Saudi Arabia might consider reducing output if there were “reasonably guaranteed oversight” of quotas and assurances that other countries wouldn’t take the kingdom’s market share, Al-Faisal said at an event in London yesterday.
“We’ve tried that in the past,” he said. “Unfortunately other producers took advantage of — not just Saudi cutbacks — but other states that have cut, like U.A.E. and Kuwait.”
OPEC exceeded its collective target for a sixth straight month in November, even after reducing supply. The 12-member group pumped 30.56 million barrels a day, 424,000 barrels a day less than in October, according to a separate Bloomberg survey of oil companies, producers and analysts. It’s next scheduled to meet on June 5.
–With assistance from Inal Ersan in Dubai.
Copyright 2014 Bloomberg.