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Crude oil drops below USD100 ahead of OPEC meetings

Published 12/14/2011, 04:12 AM
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Investing.com – Crude oil futures edged lower on Wednesday, trading below USD100-a-barrel as markets awaited the outcome of a meeting of the Organization of Petroleum Exporting Countries in Vienna, as well as key U.S. inventory data.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at USD99.83 a barrel during European morning trade, edging 0.3% lower.      

It earlier fell by as much as 0.45% to trade at a daily low of USD99.63 a barrel.

Oil traders were focusing on a meeting of OPEC oil producers, where the group’s members are to review production quotas. The oil cartel has not changed output targets since January 2009.

Venezuela’s Oil Minister Rafael Ramirez said on Tuesday that OPEC's Gulf members should cut their excess oil production as output from Libya improves, but added that the cartel should maintain its official target.

Iranian Oil Minister Rostam Ghasemi, who is also OPEC's president offered similar comments, saying that some OPEC members should reduce output to accommodate the return of shipments from Libya and gains in Iraqi supply.

Iran and Venezuela are seen as OPEC's traditional hawks, regularly calling on the cartel to cut production to boost oil prices and consequently their revenues.

But Saudi Arabia’s Oil Minister Ali al-Naimi said he was happy with OPEC's current output, while adding that crude markets are balanced.

The group failed to reach an agreement on quotas at its last meeting in June after a Saudi-backed proposal to boost output to make up for lost Libyan supply was rebuffed by Iran, Venezuela and four other countries.

Meanwhile, markets were also awaiting key weekly government data on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.

The report was expected to show that U.S. crude oil stockpiles fell by 2.0 million barrels last week, while gasoline supplies were forecast to increase by 1.0 million barrels.

After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 0.42 million barrels last week, while total gasoline supplies fell by 0.12 million barrels.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery shedding 0.4% to trade at USD108.64 a barrel, with the spread between the Brent and crude contracts standing at USD8.81 a barrel.


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