BLBG: Oil Trades Above $73 as OPEC Is Set to Maintain Output Targets
By Yee Kai Pin
Dec. 22 (Bloomberg) -- Crude oil traded little changed before the Organization of Petroleum Exporting Countries meets today in Angola, where the group is expected to maintain production targets.
Oil was above $73 a barrel as OPEC, which pumps 40 percent of the world’s oil, will “absolutely not” change its output quotas, Saudi Arabia’s Oil Minister Ali al-Naimi said yesterday. Distillate fuel inventories in the U.S., the world’s largest energy user, probably fell as colder weather moved across the country’s north, according to a Bloomberg News survey.
OPEC is “quite comfortable with levels for crude,” Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney, said in an interview on Bloomberg Television. “The recent rally we’ve seen is clearly the result of the weather we’ve had particularly in Europe and North America. We’re optimistic that prices will remain neutral or lower, rather than trade higher.”
Crude oil for February delivery was at $73.77, up 5 cents, in electronic trading on the New York Mercantile Exchange at 1:40 p.m. Singapore time. The January contract, which expired yesterday, fell 89 cents, or 1.2 percent, to $72.47 a barrel.
Prices have gained 65 percent this year as OPEC’s pledge in 2008 to reduce 4.2 million barrels a day of output took effect. The 12-member group left targets unchanged for a third time when it last gathered in September.
Al-Naimi predicted “gradual, steady growth” in the global economy next year. All the 36 analysts surveyed by Bloomberg News last week said they expected OPEC to maintain formal production limits today in Luanda, Angola.
Dollar Rebound
“This is all priced into the market,” said Clarence Chu, a trader with options dealers Hudson Capital Energy in Singapore. “I expect prices to be rather stable.”
Oil fell 1.2 percent yesterday after the dollar strengthened against the euro, reducing investor appetite for commodities as a hedge against inflation.
“It continues to be a dollar story,” Mark Pervan, a senior commodity strategist with ANZ Banking Group Ltd., said in Melbourne. “We’ve seen a bit of washing out of the risk premium from last week’s Iran-Iraq news. Clearly the market is a little concerned about supply conditions.”
Iranian troops withdrew from an oil field in a disputed border region with Iraq late Dec. 19 after an armed confrontation, Iraq’s deputy oil minister Abdul Kareem al-Luaibi said on Dec. 20.
The dollar traded near its strongest level in more than three months against the euro. The U.S. currency was at $1.4293 per euro at 1:40 p.m. in Singapore, from $1.4275 yesterday in New York.
Fuel Stockpiles
U.S. distillate inventories, which include heating oil and diesel, dropped 2 million barrels in the week ended Dec. 18 from 164.4 million the previous week, according to the median of estimates from 12 analysts before an Energy Department report tomorrow. All of the survey respondents forecast a decrease.
Crude oil inventories probably declined 1.73 million barrels from 332.4 million, the survey showed. Gasoline supplies are expected to have climbed 1 million barrels from 217.2 million.
Brent crude oil for February settlement traded at $72.94 a barrel, down 5 cents, on the London-based ICE Futures Europe exchange at 1:39 p.m. Singapore time. Yesterday, the contract lost 76 cents, or 1 percent, to settle at $72.99 a barrel.
To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net
