Oil Set for Worst Month Since July as OPEC Seen Standing Firm
Oil headed for its largest monthly drop Nov. 30 since July as Iran signaled the Organization of Petroleum Exporting Countries won’t reduce its production target at a meeting this week.
Futures gained 0.8% in New York, paring a drop of almost 10% for November. Iran expects no major decisions that would change OPEC’s output target when the group gathers Dec. 4 in Vienna, Oil Minister Bijan Namdar Zanganeh said Nov. 28 at a conference in Tehran. Speculators increased their bullish position on Brent to a two-week high through Nov. 24.
Oil is set to average below $50 for a fourth month, the longest stretch since the global financial crisis, as a record supply glut showed no signs of ending amid a producers fight for market share.
Iran has said it will announce plans during the Vienna meeting to expand output, a year after Saudi Arabia led an OPEC decision to keep pumping and drive out higher-cost shale rivals.
“Saudi and the other core OPEC countries have repeatedly stated that it is the high-cost producers that should reduce oil production in the world when the market is flooded with oil, not the low-cost producers,” Torbjoern Kjus, an analyst at DNB ASA in Oslo, said by e-mail.
Iran has said it plans to pump an additional 500,000 barrels a day once international sanctions over its nuclear program are lifted. That quantity won’t have a significant impact on prices, and there will be no problem selling it, Amir Hossein Zamaninia, the deputy oil minister for international and commerce affairs, told reporters Nov. 28.
OPEC’s resistance to cutting oil output is paying off, according to the International Energy Agency, as U.S. shale drillers idle rigs and major oil companies reduce investment, leaving the 12-member group to fill the gap.
OPEC has produced above its own quota of 30 million barrels a day every month since May 2014, data compiled by Bloomberg News show. Crude stockpiles in the United States, the world’s biggest oil consumer, have increased to 488.2 million barrels, 120 million above the five-year seasonal average level, according to the Energy Information Administration.
Hedge funds and other money managers raised net-long positions in Brent by 19,208 contracts to 177,945 in the week to Nov. 24, according to data from ICE Futures Europe. That’s the highest since the week to Nov. 10.
