OIL PRICES DOWN
West Texas Intermediate extended its slump into a bear market amid speculation that rising global oil supplies will be more than enough to meet slowing demand. London's Brent traded at the lowest price since December 2010.
Futures fell as much as 2.5 percent in New York, set for the biggest weekly drop since June 2012. The shale boom boosted U.S. production while the Organization of Petroleum Exporting Countries pumped the most oil in 13 months. Saudi Arabia reduced prices for November exports to Asia to a six-year low as the IMF downgraded its global growth outlook.
"We look to be in a capitulation phase in the oil market where investors are acquiescing to the reality of the supply overhang," Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone today. "The trigger was the news that Saudi Arabia was cutting prices. We're certainly into the region where OPEC may consider acting."
WTI for November delivery declined as much as $2.18 to $83.59 a barrel in electronic trading on the New York Mercantile Exchange and was at $84.25 at 2:42 p.m. Singapore time. The contract decreased $1.54 to $85.77 yesterday, the lowest close since December 2012. Prices, down 6.1 percent this week, are more than 20 percent below a recent peak, meeting a common definition of a bear market.
Brent for November settlement slid as much as $1.94, or 2.2 percent, to $88.11 a barrel on the London-based ICE Futures Europe exchange. It's poised for a third weekly loss. The European benchmark crude, also in a bear market, traded at a premium of $4.68 to WTI, compared with $2.57 on Oct. 3.
WTI has declined 14 percent this year amid accelerating output from exporters including Russia, which is producing near a post-Soviet record. OPEC, responsible for about 40 percent of the world's oil supply, pumped 30.935 million barrels a day last month, a Bloomberg survey of producers and analysts show.
The 12-member group will probably announce a cut to either their output or formal production target at a meeting on Nov. 27, said 11 of 20 analysts surveyed by Bloomberg News. Estimates ranged from a reduction of 500,000 to 1 million barrels a day.
Price cuts announced last week by Saudi Arabia fueled speculation that the world's largest crude exporter would let oil fall rather than cede market share to rivals in OPEC. That's misguided, according to UBS AG and BNP Paribas SA. Brent is below a band of $95 to $110 a barrel endorsed by Oil Minister Ali Al-Naimi, ensuring the country will curb output, they said.
U.S. oil production increased to 8.88 million barrels a day last week, the most since March 1986, according to the Energy Information Administration. Crude inventories in the world's biggest oil consumer gained by 5 million barrels to 361.7 million, the Energy Department's statistical arm said on Oct. 8.
The International Monetary Fund said on Oct. 7 that the global economy will expand by 3.8 percent in 2015, down from a July projection of 4 percent. The International Energy Agency in Paris lowered its oil-demand forecasts for this year and next in its monthly report on Sept. 11.
WTI will probably extend its slide next week, a separate Bloomberg survey shows. Fourteen of 28 analysts and traders predict futures will drop though Oct. 17, while eight said prices will climb.
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BLOOMBERG - As Saudi Arabia led OPEC’s output cuts this year to shrink a global glut, it’s lost out on market share in the world’s biggest energy consumer. Russia in September retained the top Chinese supplier spot for the seventh straight month, while the kingdom was third.
PLATTS - The quality of Russia's key Urals crude exports towards Europe will continue to fall next year as more of the country's low-sulfur oil flows are diverted eastward to China, Russian national oil pipeline operator Transneft warned.
FT - OCI — the world’s third-largest polysilicon maker by capacity and South Korea’s biggest — this month reported a 3,373 per cent increase in operating profit to Won78.7bn ($72m) for the July-September quarter, its best performance in five years. Rival Hanwha Chemical saw third-quarter net profit jump 25 per cent to a record Won252bn.
U.S. Rig Count is up 330 rigs from last year's count of 593, with oil rigs up 273, gas rigs up 58, and miscellaneous rigs down 1 to 0. Canada Rig Count is up 41 rigs from last year's count of 174, with oil rigs up 13, gas rigs up 30, and miscellaneous rigs down 2 to 2.