Oil headed for its largest monthly drop since July as Iran signaled the Organization of Petroleum Exporting Countries won’t reduce its production target at a meeting this week.
Futures were little changed in New York and down 10 percent in November. Iran expects no major decisions that would change OPEC’s output target when the group gathers Dec. 4 in Vienna, Oil Minister Bijan Namdar Zanganeh said Saturday at a conference in Tehran. Prices retreated at the end of last week as Libya sought to boost supply and Russia ruled out military retaliation against Turkey for downing its jet near the Syrian border.
Oil is set to average below $50 for a fourth month, the longest stretch since the global financial crisis, as a record supply glut showed no signs of ending amid a producers’ fight for market share. Iran has said it will announce plans during the Vienna meeting to expand output, a year after Saudi Arabia led an OPEC decision to keep pumping and drive out higher-cost shale rivals.
“Saudi Arabia won’t change its strategy to accommodate Iran’s return,” said Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul. “We’ll probably see a prolonged oversupply until the first half of next year.”
West Texas Intermediate for January delivery was at $41.77 a barrel on the New York Mercantile Exchange, up 6 cents, at 12:51 p.m. Singapore time. The contract ended Friday down $1.33, or 3.1 percent, at $41.71. The volume of all futures traded was about 43 percent below the 100-day average.
Brent for January settlement was 13 cents lower at $44.73 a barrel on the London-based ICE Futures Europe exchange. Prices have fallen almost 10 percent this month. The European benchmark crude was at a premium of $2.96 to WTI.
Iran has said it plans to pump an additional 500,000 barrels a day once international sanctions over its nuclear program are lifted. That quantity won’t have a significant impact on prices and there will be no problem selling it, Amir Hossein Zamaninia, the deputy oil minister for international and commerce affairs, told reporters Saturday.
OPEC’s resistance to cutting oil output is paying off, according to the International Energy Agency, as U.S. shale drillers idle rigs and major oil companies reduce investment, leaving the 12-member group to fill the gap.
OPEC has produced above its own quota of 30 million barrels a day every month since May 2014, data compiled by Bloomberg show. Crude stockpiles in the U.S., the world’s biggest oil consumer, have increased to 488.2 million barrels, 120 million above the five-year seasonal average level, according to the Energy Information Administration.
– Bloomberg [Heesu Lee]