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Oil Rebounds From Eight-Month Low Before OPEC Meeting

By on June 14, 2012

Oil rebounded from the lowest close in eight months in New York amid speculation that declines were excessive as OPEC meets to discuss production quotas.

Futures rose as much as 0.5 percent, after earlier falling for the fifth time in six days. The Organization of Petroleum Exporting Countries, which meets in Vienna today, 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, data compiled by Bloomberg showed.

“We’ve got a core long position on oil,” Jonathan Barratt, chief executive officer of Barratt’s Bulletin in Sydney, said in a Bloomberg Television interview. “We still feel we’re getting to the lower end of prices. We see $80 a barrel as having good psychological support.”

Oil for July delivery rose as much as 43 cents to $83.05 a barrel in electronic trading on the New York Mercantile Exchange, and was at $83.01 at 1:21 p.m. Singapore time. It earlier fell 0.4 percent. The contract slid 0.8 percent yesterday to $82.62, the lowest close since Oct. 6. Prices are down 16 percent this year.

Brent oil for July settlement, which expires today, gained 55 cents to $97.68 a barrel on the London-based ICE Futures Europe exchange. The more-actively traded August future rose 56 cents to $97.28. The European benchmark contract’s premium to West Texas Intermediate was at $14.67, from $14.51 yesterday.

OPEC Output

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. Buy orders tend to be clustered near chart-support levels.

Ministers from Ecuador, Kuwait and Nigeria said yesterday that OPEC is set to keep its 30 million barrel-a-day limit. While an increase of as much as 1 million barrels a day suggested by some Gulf Arab countries would help Europe weather its slowdown, the 12-member group will probably settle on the status quo, according to two Middle Eastern delegates who declined to be identified because a decision hasn’t been made.

“The OPEC meeting is a foregone conclusion,” said Fereidun Fesharaki, the chairman of FactsGlobal Energy Inc. (GEYI) in Singapore. “Brent is a little below $100 a barrel, which is what Saudi Arabia wants. OPEC will not let Brent go below $90.”

Venezuela, Iran

Countries including Venezuela and Iran have argued that crude supplies are excessive. Iran is OPEC’s second-biggest producer. Venezuela overtook Saudi Arabia last year as the nation with the largest proven oil reserves, BP Plc (BP/) said in its Statistical Review of World Energy yesterday. The South American country’s deposits were at 296.5 billion barrels at the end of last year, surpassing Saudi Arabia’s 265.4 billion, BP said.

The International Energy Agency reduced its forecast for 2012 crude consumption to 89.9 million barrels a day, the Paris- based energy adviser said yesterday. That’s revised down by 100,000 barrels from May and reflects an increase of 820,000 barrels from last year.

U.S. demand for fuels averaged 18.7 million barrels a day over the past four weeks, the Energy Department reported yesterday. That’s down 1.9 percent from a year ago. The drop is “reflecting the ongoing weakness in macro data,” Michael Wittner, the global head of oil market research at Societe Generale SA in New York, said in a report.

Gasoline stockpiles declined 1.7 million barrels, the report showed. They were projected to rise1.4 million barrels, according to the survey. Distillate inventories, a category that includes heating oil and diesel, slid 63,000 barrels compared with a forecast 1.2 million barrel gain.

Crude supplies dropped 191,000 barrels last week, the report showed. They were forecast to slip 1.5 million barrels, according to the median estimate from 12 analysts in a Bloomberg News survey.

Companies operated refineries at 92 percent of capacity last week, up 1 percentage point from the prior week and the highest level since August 2007, the report showed.