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Oil ends week on a flat note as OPEC gathers

Oil prices ended flat on Friday, with OPEC officials sending mixed messages about a production cut before a regularly scheduled meeting next month.

After tumbling earlier in the day during an abbreviated session on the New York Mercantile Exchange, light, sweet crude for January delivery settled down US$0.01 at US$54.43.

In London, January Brent crude rose US$0.36 to settle at US$53.49 on the ICE Futures exchange.

Yet for most of the day, trading at NYMEX was as volatile as it had been for the entire week, save for Thursday, when the market was closed for the US Thanksgiving holiday.

Crude jumped 9 percent on Monday, fell 7 percent on Tuesday, and rose more than 7 percent on Wednesday. The week has been marked by light trading, which tends to be more volatile.

For the week, crude was up about 9 percent from the settlement price last Friday.

“We were a little overcooked earlier this week, so it looks like we’re going to give some of it back today,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.

Oil prices fluctuated between US$50 and US$55 this week, pausing after a fall of more than 60 percent since reaching a record US$147.27 in mid-July.

Grim economic data this week pointing to a severe recession in the US in the fourth quarter and signs of slowing growth around the world kept prices from rebounding further.

“The drop-off in demand is going to continue,” said Jonathan Kornafel, Asia director at Hudson Capital Energy in Singapore. “There’s no reason for the market to rally.”

Oil will likely trade below US$50 a barrel and could test the US$40 level by the end of this year, Kornafel said.

Investors were watching whether OPEC reduced output quotas at an informal meeting yesterday in Cairo, Egypt.

OPEC oil ministers on Friday downplayed expectations of an immediate output cut, but didn’t dismiss it outright.

“I don’t expect a cut out of the Cairo meeting, but I do expect a 1.5 million barrel cut at their December meeting,” Kornafel said. “I wouldn’t be surprised to see Russia get in with OPEC either.”
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