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Oil prices tumble on OPEC news

Oil prices fell on Monday as OPEC ministers said they expected Thursday’s ministerial meeting to defer production cuts as fears of a price collapse early next year have eased.
/ Source: Reuters

Oil prices fell Monday as OPEC ministers said they expected Thursday’s ministerial meeting to defer production cuts as fears of a price collapse early next year have eased.

Speculative hedge funds led the selling, which accelerated after news of an increase in Iraqi exports.

January Brent futures lost 45 cents to $28 a barrel while U.S. crude futures stood at $29.80, down 63 cents and nearly $4 off an eight-month high hit in November.

Prices fell as ministers from Iran, Kuwait the United Arab Emirates and Indonesia said they expected the OPEC cartel to hold production quotas steady at a December 4 meeting in Vienna.

“I think certainly we don’t need a new cut now or in January,” said Iranian Oil Minister Bijan Zanganeh. “The price is in the top side of the band (OPEC’s $22-$28 target range) and we are committed not to put pressure for a price out of the band.”

OPEC pulled a surprise at its September meeting, deciding at the last minute to cut production by 3.5 percent from November to stop rising supply from Russia and Iraq from swelling global stockpiles.

Some OPEC ministers said in September that they expected to reduce supplies again in December, but prices have risen 12 percent since then and are at $30 for U.S. crude — worryingly high for industrialized nations heading into winter.

UAE oil minister Obaid bin Saif al-Nasseri said OPEC could meet in January or February to review policy. Analysts say OPEC could decide then to reduce supplies for the second quarter when fuel demand declines following the northern winter.

“I think they’ll make their mind up at the meeting. If the price falls a couple of dollars by then they’ll probably cut. If not then they’ll leave it unchanged and arrange to meet again in January or February,” said Adam Sieminski of Deutsche Bank in London.

OPEC’s biggest producer Saudi Arabia has so far kept silent on what it expects from Thursday’s meeting.

News that Iraq’s crude oil exports rose by about 350,000 barrels per day to 1.57 million bpd in November, meeting the country’s sales target also weighed on prices.

Delays in the post-war recovery of Iraq’s oil exports have helped contain growth in oil inventories and held OPEC’s reference price above the top end of the cartel’s $22-28 target range for most of the last two months.

UAE’s Nasseri said OPEC stood ready to defend supplies if the pace of Iraqi exports picks up. Repeated sabotage has kept closed Iraq’s northern export pipeline since the war.