Oil resumes decline as Organisation of Petroleum Exporting Countries meeting looms

Oil fell for the third time in four days as ministers from the Organisation of Petroleum Exporting Countries arrived in Vienna to discuss production policy.

Futures dropped as much as 1.3% to stay below $42 a barrel in New York amid a broader decline in commodities.

Saudi Arabia will consider all issues at tomorrow’s gathering and listen to the concerns of other group members, oil minister Ali al-Naimi said.

Oil has slumped more than 38% since Saudi Arabia led Opec’s decision a year ago to maintain output and defend market share against higher-cost shale producers.

Iranian oil minister Bijan Namdar Zanganeh sent a letter to the group calling for a cut in excess supply as the group’s production stays near record levels.

At the same time, Opec members including Iran, Iraq and Libya are planning instead to raise output, according to Bjarne Schieldrop of SEB.

“Iran, Iraq, Libya and several of the other Opec members are going to increase production substantially during the coming years,” Schieldrop, Oslo-based chief commodities analyst at SEB, said.

“There is a very low chance for a cut from Opec at the upcoming meeting, which is evident in the weak prices leading up to it.”

West Texas Intermediate for January delivery lost as much as 56 cents to $41.29 a barrel on the New York Mercantile Exchange and was at $41.38 in London trade.

Prices decreased 11% in November, the most in four months.

Brent for January settlement was down 53 cents at $43.91 a barrel on the London-based ICE Futures Europe exchange.

The European benchmark crude was at a premium of $2.51 to WTI.

A stronger dollar was also pushing oil lower yesterday, Torbjoern Kjus, chief oil economist at DNB in Oslo, said.

A strengthening dollar makes commodities priced in the US currency more expensive for users of other currencies, reducing their appeal.

Opec’s 12 members have pumped more than their collective production target of 30m barrels a day the past 18 months, data compiled by Bloomberg show.

Venezuela has called for a supply reduction while Libya has signalled plans to expand output ahead of the Vienna summit, the group’s first ministerial meeting since June.

Iran, Opec’s fifth-largest producer, plans to raise output by 500,000 barrels a day within a week of Western sanctions being removed and by 1m barrels a day within six months.

When asked if Saudi Arabia will stick to its strategy of defending against competing supplies, al-Naimi told reporters Tuesday: “Who said we are keeping market share strategy? Did I ever say?”