Oil Poised for Weekly Gain as Analysts Divided on OPEC Policy

03:08 PM @ Friday - 21 November, 2014
Brent and West Texas Intermediate headed for their first weekly advance since September as analysts remain divided on whether OPEC will cut production to support prices that are in a bear market.

Futures gained as much as 0.8 percent in London and have risen 0.3 percent this week. Half of the 20 analysts surveyed by Bloomberg News predict the Organization of Petroleum Exporting Countries will reduce output, while the rest expect no change. An OPEC sub-committee affirmed the 12-member group’s estimate that demand for its crude will be lower next year, officials who attended the meeting said.

Oil has dropped about 30 percent from a June peak as the U.S. pumps at the fastest rate in more than three decades amid signs of weakening demand. Leading OPEC members such as Saudi Arabia are resisting calls to decrease supply while Venezuela and others seek action to bolster the market before a Nov. 27 gathering in Vienna.

“It’s the countdown to the OPEC meeting,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “There are certainly differing views within the group -- those that want cuts and those that don’t. Saudi Arabia will try and protect its market share through discounted sales; there’s a price war.”

Brent for January settlement climbed as much as 67 cents to $80 a barrel on the London-based ICE Futures Europe exchange and was at $79.64 at 2 p.m. in Singapore. The volume of all futures traded was about 14 percent below the 100-day average. The European benchmark crude was at a $3.29 premium to WTI, compared with $3.59 on Nov. 14.

OPEC Supply

WTI for January delivery increased as much as 95 cents to $76.80 a barrel in electronic trading on the New York Mercantile Exchange. December futures expired yesterday after rising $1 to $75.58. Front-month prices have advanced 0.7 percent this week.

Saudi Arabia, OPEC’s biggest producer, may be shifting its focus to defend market share, according to Bank of America Corp. The kingdom may prefer lower and more volatile oil prices to discourage investment in North American shale output, it said in a note yesterday, projecting that OPEC may trim its collective target by no more than 500,000 barrels a day.

OPEC, which supplies about 40 percent of the world’s oil, pumped 30.97 million barrels a day in October, data compiled by Bloomberg show. That exceeded its quota of 30 million a day, first agreed in January 2012, for a fifth straight month.

Iran will protect its share of global sales and can double exports in two months if sanctions are removed, Oil Minister Bijan Namdar Zanganeh said, according to the ministry’s news website Shana. The Persian Gulf nation and world powers are seeking to break an impasse by Nov. 24 and end an 11-year dispute over its nuclear program.

WTI may fall next week, said 16 of 34 analysts and traders in a separate Bloomberg survey. Eleven respondents forecast futures will gain while seven expect little change.
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