Brent and West Texas Intermediate extended their declines into a fourth day to reach fresh four-year lows as a production cut agreement at OPECs meeting in Vienna seemed unlikely.
January US crude fell by $1.47 on Thursday to $72.22 per barrel by 09:01 GMT. Prices held in a daily range between $73.56 and $71.89 a barrel, the lowest since early-September 2010. The contract lost 0.54% on Wednesday to $73.69.
Meanwhile on the ICE, Brent for delivery in the same month fell 2.48% to $75.82 a barrel, having shifted in a daily range between $77.46 and $75.48, also the lowest since September 2010. The European crude benchmark dropped 0.74% on Wednesday to $77.75, settling at a premium of $4.06 to WTI. The gap narrowed to $3.60 on Thursday.
Officials from Qatar, Saudi Arabia, Kuwait and the United Arab Emirates said that Gulf producers will not suggest a reduction in output during the OPEC meeting on Thursday, lowering the chances of a joint price support.
“The GCC reached a consensus,” Al-Naimi, Saudi Arabias Oil Minister, told reporters. “We are very confident that OPEC will have a unified position” referring to the Gulf Cooperation Council.
Bijan Zangeneh, Irans oil minister, said that OPECs fifth-largest producer wont make any output cuts. He also added that Iran is in a “very close” position with Saudi Arabia, after he met with Al-Naimi.
“OPEC is the main event,” said Michael McCarthy, a chief strategist at CMC Markets, in a phone interview. “The Saudi actions over the past month quite clearly indicate to the market that OPEC is unlikely to agree to production cuts, or if they do, the market will doubt the intent to deliver.”
Meanwhile, China saw an opportunity during the low priced oil period and increased its petroleum reserves by about 30 days worth of imports, nearly twice the size of what the worlds top energy consumer had planned.
“Saudi Arabia for the first time provided a firmer stance on their view on cutting production, indicating they believe the oil market will stabilize itself” ANZ bank said.
The oil market remained under pressure by Wednesdays bearish EIA inventory report. The government agency said that US crude supplies jumped by 1.946 million barrels to 383.0 million last week, exceeding analysts’ projections for a 250 000-barrel increase. Inventories at the Cushing, Oklahoma storage hub rose by 1.4 million barrels to 24.6 million.
Domestic crude production surged to 9.077 million barrels per day from 9.004 million last week, the highest on record for weekly data dating back to January 1983. Refineries operated at 91.5% of their operable capacity, compared to 91.2% during the week ended November 14th.
Total motor gasoline supplies gained 1.825 million barrels to 206.4 million, exceeding analysts’ projections for a jump of 1.817 million. Distillate fuel inventories, which include diesel and heating oil, fell by 1.648 million barrels to 113.1 million, topping forecasts for a 0.550-million increase.
Also weighing on the oil segment, the US Labor Department reported yesterday that initial jobless claims rose to 313 000 in the week ended November 22nd, the highest since early September. Separate data showed that pending home sales unexpectedly contracted in October, while the annualized growth pace of new home sales came in below expectations.
A better-than-projected durable goods orders report for October fanned positive sentiment but the Thomson Reuters/University of Michigan Consumer Sentiment Index unexpectedly slid in November, confirming a drop in consumer confidence reported by the Conference Board on Tuesday.
According to Binary Tribune’s daily analysis, West Texas Intermediate January futures’ central pivot point is at $73.82. In case the contract breaches the first resistance level at $74.35, it may rise to $75.00. Should the second key resistance be broken, the US benchmark may attempt to advance $75.53.
If the contract manages to breach the first key support $73.17, it might come to test $72.64. With this second key support broken, movement to the downside could continue to $71.99.
Meanwhile, January Brent’s central pivot point is projected at $77.97. The contract will see its first resistance level at $78.64. If breached, it may rise and test $79.53. In case the second key resistance is broken, the European crude benchmark may attempt to advance $80.20.
If Brent manages to penetrate the first key support at $77.08, it could continue down to test $76.41. With the second support broken, downside movement may extend to $75.52 per barrel.