Crude Oil Price Falls Saudi Arabia Signaled OPEC
Crude oil prices dropped for a second day after Saudi Arabia signaled that OPEC may leave production targets unchanged at its Oct. 14 meeting and the group lowered its forecast for demand for its oil.
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Saudi Arabia’s Oil Minister said the market is “very well-balanced” and prices between $70 and $80 a barrel are “ideal.” Sanford C. Bernstein and Co. cut its forecasts for 2011 and 2012 oil prices because of high stockpiles. “Oil has moved beyond OPEC’s ideal price range,” said Sintje Diek, an oil analyst at HSH Nordbank in Hamburg.
Crude for November delivery was down 35 cents, or 0.4 percent, at $81.86 a barrel on the New York Mercantile Exchange at 1:32 p.m. London time after falling as low as $80.88. The contract reached a five-month high of $84.43 last week. Brent crude for November settlement on the London-based ICE Futures Europe exchange traded down 31 cents, or 0.4 percent, at $83.41 a barrel after falling as low as $82.48.
Oil pared earlier losses as the dollar gave up some of its gains against the euro, buoying demand for commodities. The U.S. currency was at $1.3827 against the euro, after gaining to $1.3775 earlier.
The “weakening of the dollar from short-term highs has brought with it some buyers of oil,” said Alexander Ridgers, head of commodities at London-based CMC Markets, which handles more than $150 million a day in U.S. crude contracts.
OPEC Demand
The Organization of Petroleum Exporting Countries trimmed its demand forecast for its members’ crude for this year as production from outside the group grew the most since 2002.
OPEC, responsible for about 40 percent of global supplies, predicted in a monthly report today that the world will need 28.6 million barrels of oil a day from its 12 members this year. That’s about 100,000 barrels a day less than last month’s revised figure.
“The world economy continues to expand at below-average levels,” OPEC’s secretariat said in the report. U.S. economic growth is slowing “amidst a still very challenging level of unemployment.” The U.S. is the world’s largest oil consumer.
“OPEC is in a comfortable position to do nothing,” said Kaha Kiknavelidze, a managing partner at London-based Rioni Capital Partners LLP, which specializes in emerging markets.
Bernstein cut its forecasts for West Texas Intermediate, which trades in New York, as U.S. crude stockpiles have risen about 7 percent in the last year. WTI may average $90 a barrel in 2011, down from the research company’s earlier estimate of $103, and average $102 in 2012, down 8 percent from its earlier prediction, according to a report e-mailed today.