Oil pared losses after closing at its lowest price since July 2009 as Saudi Arabia questioned the need to cut output, bolstering speculation that OPEC’s biggest producer plans to defend its market share.
European benchmark Brent crude oil futures rose as much as 1.1 percent in London, while US benchmark West Texas Intermediate (WTI) advanced 1.2 percent in New York.
The market would correct itself, Saudi Arabian Oil Minister Ali al-Naimi said.
Global demand for crude from OPEC producers is set to fall next year by about 300,000 barrels a day to 28.9 million, the least since 2003, the group predicted on Wednesday.
Oil’s collapse into a bear market has been exacerbated as OPEC’s three largest members offered discounts on exports to Asia.
The cartel, which supplies about 40 percent of the world’s crude oil, decided against reducing its output quota at a meeting last month, even though US production is at its fastest pace in more than three decades.
Brent crude for January settlement gained as much as US$0.71 to US$64.95 a barrel on the London-based ICE Futures Europe exchange and was at US$64.67 at 2:48pm in Singapore yesterday.
It dropped US$2.60 to US$64.24 on Wednesday.
Brent crude traded at a premium of US$3.25 to WTI.
Prices have slid 42 percent this year.
WTI for January delivery climbed as much as US$0.72 to US$61.66 a barrel in electronic trading on the New York Mercantile Exchange yesterday.
The contract lost US$2.88 to US$60.94 on Wednesday.
Total volume was about 5 percent below the 100-day average.
Prices have decreased 38 percent this year.
Saudi Arabia led OPEC’s decision on Nov. 27 to maintain its collective quota at 30 million barrels per day, resisting calls from members including Venezuela to reduce output.
The group pumped 30.56 million barrels per day last month, exceeding its target for a sixth straight month, a Bloomberg survey of companies, producers and analysts showed.
“Why should I cut production?” al-Naimi said to reporters on Wednesday in Lima, Peru, where he is attending UN climate talks. “This is a market and I’m selling in a market. Why should I cut?”
Venezuela wants special discussions to be held before the group’s next scheduled gathering on June 5.
“Our position on OPEC is that they defend the fair price of our oil,” Venezuelan Minister of Foreign Affairs Rafael Ramirez said on Venezuela’s TeleSUR television network. “We don’t believe in the free market. We must make an effort to reduce overproduction of oil.”
Meanwhile, production in the US, the world’s largest oil consumer, expanded to 9.12 million barrels per day through Friday last week, the US government’s Energy Information Administration reported on Wednesday.
That is the fastest rate in weekly records that started in January 1983, according to the US Department of Energy’s statistical arm.
The US boom in oil production has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked supplies from shale formations including the Eagle Ford in Texas and the Bakken in North Dakota.
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