Oil steadies after worst month since July, as OPEC members gather

NEW YORK (Bloomberg) -- Oil was little changed after its biggest monthly decline since July as OPEC ministers arrive in Vienna ahead of this week’s policy meeting.

 

West Texas Intermediate futures swung between gains and losses. Saudi Arabia will discuss all issues and listen to concerns of other members at the Friday gathering, said the nation’s Oil Minister Ali al-Naimi. The Organization of Petroleum Exporting Countries pumped more than its quota in November, exceeding it for an 18th month, a Bloomberg survey showed. Gasoline advanced after the U.S. changed blending requirements for the fuel.

 

Oil prices have fallen almost 40% the past year as a record surplus persisted amid global producers’ fight for market share. OPEC is meeting a year after Saudi Arabia led an agreement to keep production high and drive out higher-cost shale rivals in the U.S. Speculator short positions in WTI, bets that prices will drop, rose to the highest level since March, the U.S. Commodity Futures Trading Commission said Monday.

 

"We’re listening to the Saudis for clues, and they’re sending mixed signals," Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $3.4 billion, said by phone. "The market is so short that if anything conciliatory comes out of the meeting there will be a short-covering rally."

 

WTI, Brent

 

West Texas Intermediate for January delivery rose 2 cents to $41.67/bbl at 12:01 p.m. on the New York Mercantile Exchange. Total volume was 8.8% below the 100-day average. Prices decreased 11% in November.

 

Brent for January settlement declined 7 cents to $44.54/bbl on the London-based ICE Futures Europe exchange. It fell 10% in November. The European benchmark crude was at a $2.87 premium to WTI.

 

"OPEC isn’t going to do anything this week," Stephen Schork, president of the Schork Group Inc. in Villanova, Penn., said by phone. "The market has been in a holding pattern the past two weeks, but should make another move lower eventually."

 

OPEC’s production dropped by 33,000 bpd to 32.121 million in November, led by declines from Nigeria and Libya, the Bloomberg survey oil companies, producers and analysts showed. While total output shrank, Saudi Arabia and Iraq, the group’s two biggest producers, pumped more oil than in October.

 

Iranian Viewpoint

 

Iranian Oil Minister Bijan Namdar Zanganeh sent a letter to OPEC calling for a cut in excess output, Mehr news agency reported Tuesday. The group should reduce current production to come back in line with its target of 30 million, Zanganeh said.

 

U.S. crude stockpiles probably decreased by 800,000 bbl last week, according to the median estimate in a Bloomberg survey before an Energy Information Administration report on Wednesday. Stockpiles climbed to 488.2 MMbbl through Nov. 20, almost 120 million above the five-year seasonal average.

 

Gasoline futures led gains after President Barack Obama’s administration on Monday ordered refiners to blend a record 14.5 billion gal of ethanol into gasoline next year. Petroleum interests and biofuel supporters for years have sparred over whether the government should mandate higher blends of the fuel.

 

Stronger Demand

 

"Gasoline is the strongest market because low retail prices are spurring stronger demand," Tom Finlon, Jupiter, Florida- based director of Energy Analytics Group LLC, said by phone. "There were concerns that the renewable fuel mandate would be increased more. There’s relief that didn’t happen and gasoline will be a little dearer." January gasoline increased 6.42 cents, or 4.9%, to $1.3711 a gal in New York.

 

Regular gasoline at U.S. pumps slipped to the lowest level since February. The average retail price fell 0.2 cent to $2.038 a gal Monday, according to Heathrow, Florida-based AAA, the nation’s biggest motoring group.