Brent (NYMEX:SCZ14) headed for a seventh weekly drop, the longest declining streak since November 2001, as OPEC predicted it will need to supply less crude oil amid the U.S. shale boom. West Texas Intermediate (NYMEX:CLZ14) rose in New York.
Futures in London advanced 0.9%, paring this week’s drop to 2.8%. Libya’s Mellitah and Es Sider ports were closed earlier this week by bad weather, according to three traders with knowledge of the matter. The Organization of Petroleum Exporting Countries reduced every forecast for demand for its crude through 2035 except next year’s, according to the group’s annual World Oil Outlook, released yesterday.
“Crude oil markets remain stuck in a bear trend and after a period of consolidation the downside gave way as OPEC downgraded the outlook for demand,” Ole Sloth Hansen, an analyst at Saxo Bank A/S, said by e-mail from Copenhagen.
Oil has slumped into a bear market amid signs that global supply growth is outpacing consumption. Leading OPEC members have resisted calls to cut output even as a surplus develops amid the shale boom in the U.S., which is pumping at the fastest pace in more than 30 years. Saudi Arabian Oil Minister Ali al-Naimi met with his Venezuelan counterpart Rafael Ramirez this week.
Brent for December settlement rose 575 cents to $83.61 a barrel on the London-based ICE Futures Europe exchange at 2 p.m. after erasing an earlier drop of 0.8%. The volume of all futures traded was about 5% below the 100-day average for the time of day. Prices have fallen 25% in 2014.
WTI for December delivery rose 57 cents, or 0.7%, to $78.48 a barrel in electronic trading on the New York Mercantile Exchange. Prices are down 2.6% this week and 21% this year. The U.S. benchmark crude was at a discount of $4.99 to Brent on ICE, compared with $5.32 on Oct. 31.
Global demand for crude from OPEC, which is responsible for about 40% of the world’s oil supply, may fall to a 14-year low of 28.2 million barrels a day in 2017, its outlook showed. That’s 600,000 a day less than last year’s projection and 800,000 below the amount required this year.
Oil will rebound by the second half of next year as supply and demand don’t justify the market’s collapse and prices are low enough to threaten investment in production, according to OPEC Secretary-General Abdalla El-Badri. The 12-member group, scheduled to meet Nov. 27 in Vienna, is “concerned but not panicking,” he said yesterday.
OPEC will probably reduce its output quota if oil slides to $70 a barrel, the Wall Street Journal reported, citing officials it didn’t identify. The group produced 30.974 million barrels a day last month, the most since August 2013, data compiled by Bloomberg show. That exceeded its collective target of 30 million, which was set in January 2012.
Venezuelan Foreign Minister Ramirez, also the country’s OPEC representative, said yesterday he’ll travel to Mexico today and meet with the country’s foreign and energy minsters. Saudi Arabia’s al-Naimi is due to attend a gas forum in Acapulco on Nov. 11-12. The two nations have the same oil-market interests, Ramirez said after meeting with al-Naimi on Nov. 5.
In Libya, where output gains have contributed to rising supply from OPEC, the Sharara field will resume production “soon,” said Mansur Abdallah, director of oil movement at the Zawiya refinery and port yesterday. It was pumping 290,000 barrels a day before being shut as a precaution when gunmen stormed the facility.
U.S. crude production expanded to 8.97 million barrels a day through Oct. 31, the Energy Information Administration said on Nov. 5. That’s the most in weekly data going back to January 1983, according to the Energy Department’s statistical arm.
WTI may climb next week, a Bloomberg News survey shows. Sixteen of 34 analysts and traders, or 47%, estimated futures will increase through Nov. 14, while nine respondents predict a price decline.