Oil price falls again as Opec ministers prepare to meet in Vienna

An employee filling a container with diesel at a petrol station in Riyadh in 2012.
An employee filling a container with diesel at a petrol station in Riyadh in 2012. PHOTO: REUTERS

HONG KONG (BLOOMBERG) - 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 0.7 per cent to stay below US$42 (S$59.10) 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 on Wednesday (Dec 2).

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 towards a scenario that will see Saudi Arabia back away from its strategy," Mr 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 for January delivery lost as much as 31 cents to US$41.54 a barrel on the New York Mercantile Exchange and was atUS $41.56 at 1.08pm Hong Kong time. The contract gained 20 cents to US$41.85 on Tuesday. Total volume was about 47 per cent below the 100-day average. Prices decreased 11 per cent in November, the most in four months.

Brent for January settlement was down 20 cents at US$44.24 a barrel on the London-based ICE Futures Europe exchange. It slid 0.4 per cent to US$44.44 on Tuesday, closing lower for a fourth day. The European benchmark crude was at a premium of US$2.68 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 signalled 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, Mr 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 in the week ended Nov 27, 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.