IN New York, Brent crude oil futures closed near flat and US crude fell about 1 percent in choppy trading on June 13, as weak US economic data and worries about the euro zone’s finances outweighed a drawdown in US crude inventories. Markets are awaiting a policy meeting of the Organization of the Petroleum Exporting Countries (OPEC) on June 14 in Vienna, with the producer group anticipated to keep its current output target of 30 million barrels per day intact.
Prices surged to session highs in the morning after US government data showed that domestic crude stockpiles edged down 191,000 barrels last week, the second straight week of declines. The drawdown, though smaller than expected, included a drop from record levels in stocks at the Cushing, Oklahoma delivery points for US-traded crude futures.
In London, ICE July Brent crude settled at $97.13 a barrel, just a cent lower but its fifth consecutive drop and marking a fresh 16-month low. Brent has fallen 24 per cent from its year high of $128.40 hit in March. US July crude slid 70 cents to close at $82.62 a barrel, the lowest settlement for US front-month crude since October 6 last year. US crude has dropped 25 per cent from its year high of $110.55 also struck in March.
Eurozone worries persisted, with Greek parliamentary elections at the weekend likely to drive further volatility in the markets, analysts said. The elections, which may determine whether Greece stays in the Eurozone, are weighing on crude prices because further chaos in the region may affect global oil demand.
Oil traded near the lowest close in eight months in New York before OPEC meets to discuss potential changes to its production quotas. Futures fluctuated on June 14, rising as much as 0.6 per cent after earlier falling for the fifth time in six days. The OPEC, which convenes in Vienna on June 14, will probably maintain its output ceiling as concern that global growth is shrinking outweighs calls for supply cuts to stem sliding crude prices, three of the cartel’s delegates said. Oil advanced after approaching a technical support level.
Oil for July delivery was at $82.63 a barrel, up 1 cent, in electronic trading on the New York Mercantile Exchange. It earlier fell 0.4 per cent. The contract slid 0.8 per cent to $82.62, the lowest close since October 6. Prices are down 16 per cent this year.
Brent oil for July settlement, which expires on June 14, gained 9 cents to $97.22 a barrel on the London-based ICE Futures Europe exchange. The more-actively traded August future was up 8 cents at $96.80. The European benchmark contract’s premium to West Texas Intermediate was at $14.63, from $14.51 on June 13.
Oil in New York has technical support along its 200-week moving average, according to data compiled by Bloomberg. Futures last week halted their decline near the indicator, which is at $80.80 a barrel this week.
The International Energy Agency reduced its forecast for 2012 crude consumption to 89.9 million barrels a day. That’s revised down by 100,000 barrels from May and reflects an increase of 820,000 barrels daily from last year.
US demand for fuels averaged 18.7 million barrels a day over the past four weeks, the Energy Department reported on June 13.
That’s down 1.9 per cent from a year ago. The drop is reflecting the ongoing weakness in macro data.
The Organization of Petroleum Exporting Countries has agreed to maintain the limit, one delegate said from Vienna where ministers remained locked in a meeting for more than four hours. Brent crude dropped 24 per cent since March to $97.13 a barrel, as Opec’s biggest producer, Saudi Arabia, pumped near its highest in three decades. Europe has struggled to control a crisis that started in Greece at the end of 2009 and this month led to a bailout of banks in Spain, the region’s fourth-largest economy. The International Energy Agency cut its 2012 oil demand forecast by 100,000 barrels a day.
Opec is pumping 1.58 million barrels a day more than its target, according to a monthly report from the group’s secretariat that uses secondary sources such as analysts and news agencies for output estimates. Saudi Arabia boosted production to 9.92 million barrels a day in May from 9.88 million barrels the previous month, according to Opec estimates. The kingdom said it had cut production to 9.8 million from 10.1 million barrels in April.
In Singapore, Brent futures rose towards $98 on June 15, extending gains after producer group Opec agreed to keep its output target unchanged for the second half of the year, although uncertainty surrounding Europe’s debt crisis capped further advances.
The OPEC deal to retain the output limit at 30 million barrels a day implies a cut in supply of 1.6 million bpd. Oil is also drawing support from news that major central banks stand ready to take steps to stabilise financial markets if cliffhanger Greek elections on Sunday result in turmoil.
Brent crude had gained 76 cents to $97.93 a barrel. US crude rose 69 cents to $84.60 a barrel, after settling $1.29 higher.