Brent crude rose for a third day amid signs that Iran will seek an output cut at OPECs meeting this week and after China unexpectedly reduced interest rates. West Texas Intermediate advanced in New York.Futures increased as much as 0.5 percent in London. Iranian Oil Minister Bijan Namdar Zanganeh may propose that the Organization of Petroleum Exporting Countries trim supply by 1 million barrels a day when he meets with Saudi Arabias Ali Al-Naimi before the group gathers on Nov. 27, according to Irans state-run Mehr News. China cut borrowing costs for the first time since July 2012 as the worlds second-biggest oil consumer stepped up support for its economy.
Oil has slumped into a bear market as the U.S. pumps at the fastest rate in more than three decades amid signs of weakening demand. Leading OPEC producers are resisting calls to reduce supply while others such as Venezuela and Ecuador seek action to bolster prices ahead of discussions in Vienna.
OPEC is certainly divided as to what theyre going to do, Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said in an interview on Bloomberg Television today. Look at the pressure being borne on Saudi Arabia, particularly from Iran, Venezuela -- they want a cut. This could actually represent a little bit of a rift developing within the group.
Brent for January settlement climbed as much as 38 cents to $80.74 a barrel on the London-based ICE Futures Europe exchange and was at $80.71 at 1:09 p.m. Singapore time. It advanced 1.2 percent in the five days through Nov. 21, the first weekly increase since September. The European benchmark crude traded at a premium of $3.94 to WTI.
OPEC Output
WTI for January delivery was 24 cents higher at $76.75 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 66 cents to $76.51 on Nov. 21. The volume of all futures traded was about 22 percent below the 100-day average. Prices have decreased 22 percent this year.
An official at Irans oil ministry didnt immediately comment on the Mehr News agency report when contacted by phone yesterday. OPEC will focus on supply and demand at its meeting, Suhail Al Mazrouei, the energy minister of the United Arab Emirates, said in comments on Twitter.
OPECs 12 members, which supply about 40 percent of the worlds oil, produced 30.97 million barrels a day in October, data compiled by Bloomberg show. That exceeded their collective quota of 30 million a day, first agreed in January 2012, for a fifth straight month.
Hedge Funds
The days when OPEC could almost guarantee consensus when deciding output levels are long gone, according to Abdullah Bin Hamad Al Attiyah, the former Qatari oil minister who participated in the groups policy meetings from 1992 to 2011. Theres an oversupply of about 2 million barrels a day, while global economic growth is below expectations, he said in a phone interview on Nov. 19.
Hedge funds turned less bullish on WTI as OPEC failed to signal it will act to halt the price drop. Money managers reduced net-long positions by 4.1 percent in the week ended Nov. 18, U.S. Commodity Futures Trading Commission data show. Outstanding futures contracts dwindled to the lowest level in more than two years.
In Beijing, the Peoples Bank of China reduced its benchmark lending and deposit rates effective Nov. 22. The Asian nation, which trails only the U.S. in oil consumption, is headed for its slowest full-year economic growth since 1990.
By Bloomberg
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