BLBG: Oil Rebounds From Seven-Week Low, ‘Price Is Perfect’ for OPEC
By Yee Kai Pin
Dec. 7 (Bloomberg) -- Crude oil bounced off a seven-week low on speculation above-average global fuel stockpiles will decline as demand picks up with the economy recovering from the worst recession since World War II.
Oil traded near $76 a barrel after falling Dec. 4 as the dollar gained on a Labor Department report showing U.S. employers cut the fewest jobs in November since the recession began. Prices are “perfect” and there’s no need for the Organization of Petroleum Exporting Countries to reduce global inventories, said Saudi Arabia’s Oil Minister Ali al-Naimi.
“What you’re really seeing is the price has this ability to stay in a range and not do too much -- a lot of people are just trying to readjust their portfolios,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “OPEC has also said they’re comfortable with the level of these prices.”
Crude oil for January delivery climbed as much as 63 cents, or 0.8 percent, to $76.10 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $75.72 a barrel at 2:25 p.m. Singapore time. Futures, which lost 54 percent in 2008, have gained 70 percent this year.
Oil dropped 1.3 percent Dec. 4 to $75.47 a barrel, the lowest settlement since Oct. 14, as the dollar rose, damping the investment appeal of commodities. U.S. payrolls slipped 11,000 in November and the jobless rate eased to 10 percent, the Labor Department said. The greenback was at $1.4896 per euro at 2:25 p.m. in Singapore, from $1.4858 in New York.
“Dollar strength will certainly hurt a lot of the ability for crude oil to trade higher,” Barratt said. “If we can stay above these levels, a lot of people are going to get quite aggressive.”
OPEC Output
Oil prices are in “the right range” and there’s no need to reduce inventories, according to al-Naimi. Commercially held crude oil stockpiles in the U.S., the world’s biggest energy user, have climbed to 339.9 million barrels, the highest level since August, the Energy Department said Dec. 2.
“The price is perfect, and all investors, consumers, producers -- they’re all very happy,” he said Dec. 5 in Cairo, where Arab oil ministers are holding an annual meeting.
OPEC, which pumps about 40 percent of the world’s oil, cut output last year as the recession curtailed demand. The 12- member group is scheduled to discuss policy Dec. 22 in Luanda, Angola.
Energy ministers from four other OPEC states, also gathered in the Egyptian capital for a meeting of the Organization of Arab Petroleum Exporting Countries, said OPEC isn’t likely to change its production quotas.
“An increase in target levels strikes us as being unlikely with demand still so low,” Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut, said in a note to clients today.
Brent crude oil for January settlement rose as much as 73 cents, or 0.9 percent, to $78.25 a barrel on the London-based ICE Futures Europe exchange. The contract was at $77.92 a barrel at 2:25 p.m. Singapore time. It fell 1.1 percent Dec. 4 to $77.52 a barrel, the lowest settlement in a week.
To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net
