Oil heads for weekly drop as OPEC meets to discuss output quotas
NEW YORK (Bloomberg) -- Crude in New York is set for the first weekly drop since mid-September as an OPEC committee meets to discuss how deeply some of its members should cut production to comply with the group’s pledge to reduce supply.
West Texas Intermediate oil slid as much as 1.3% Friday. Brazil will attend the Organization of Petroleum Exporting Countries gathering Saturday in Vienna as the bloc that controls about 40% of world production seeks non-member cooperation on reducing output. Brazil will join other producers from outside the group, including Russia. OPEC may agree on a collective cut and postpone “difficult decisions” on individual quotas, analysts Bassam Fattouh and Amrita Sen wrote in an Oxford Institute for Energy Studies report.
Oil has fluctuated near $50/bbl amid doubts about whether OPEC can implement the first supply cuts in eight years at its Nov. 30 meeting. The outcome of the group’s committee meeting, which will try to resolve differences over how much individual members should produce, will have ramifications for the market in the medium to long term, Secretary General Mohammed Barkindo said as the talks started. He called for members to “ forge ahead together” after Iraq this week demanded to be exempt from any cuts.
"OPEC is expected to kick the can down the street," said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. "There will probably be a wishy-washy, watered-down statement that says little. Iraq, OPEC’s second-biggest producer, wants to join Libya, Nigeria and Iran in being exempt from cuts, which makes it very difficult."
West Texas Intermediate for December delivery slipped 48 cents, or 1%, to $49.24/bbl at 9:38 a.m. on the New York Mercantile Exchange. Total volume traded was 21% below the 100-day average. Prices are down 3.2% this week.
OPEC meeting
Brent for December settlement dropped 40 cents, or 0.8%, to $50.07/bbl on the London-based ICE Futures Europe exchange. Prices are down 3.3% this week. The global benchmark crude traded at a 83-cent premium to WTI.
Brazil’s Oil and Gas Secretary Marcio Felix will leave Friday for Vienna, the country’s Energy Minister Fernando Bezerra Coelho Filho said by text message Thursday. The Latin American nation will boost output by 290,000 bpd next year to 2.9 MMbpd, the biggest increase of any non-OPEC country, according to the International Energy Agency.
Business was still looking pretty bleak for major oil companies halfway through their third-quarter earnings season. Exxon Mobil Corp. extended its longest streak of profit declines in almost three decades, while Chevron Corp. posted its first profit in a year, beating estimates.
