Oil down ahead of Opec meeting

2011-12-14 10:18

Singapore - Oil was lower in Asia on Wednesday, dampened by worries that the eurozone debt crisis has showed no signs of easing, analysts said, while investors await the outcome of an Opec output-setting meeting.

New York's main contract, light sweet crude for January delivery, fell seven cents to $100.07 a barrel and Brent North Sea crude for January delivery was off 39 cents at $109.11.

"Broader macroeconomic concerns about the eurozone continued to drag oil prices lower," analysts from Barclays Capital said in a commentary.

"The key focus of the market currently is the Opec meeting in Vienna... where the group meets against a complex economic, fundamental and political backdrop.

"Oil market balances have softened since the previous meeting, and the geopolitical context has deepened."

Analysts widely expect the Organisation of the Petroleum Exporting Countries (Opec), which supplies a third of the world's crude, to maintain its official output target of 24.84 million barrels per day - where it has stood for almost three years.

Fatih Birol, chief economist with the International Energy Agency (IEA), said current oil prices would endanger the global economy, which is under strain from the eurozone debt crisis and sluggish US growth.

"I think oil prices are already in a danger zone for the global economic recovery and I hope that prices calm down to give space for the economy to recover in Europe but in other countries as well, especially in Asia, some oil importing nations," he said to the media in Singapore.

"It (the cost of oil) is already disrupting demand growth. It's not going to lead to a decline in demand but it slows down the demand growth."

But with the IEA estimating actual Opec production hit 30.68 million barrels of oil per day in November - the highest in more than three years - the cartel may decide to issue a statement promising stricter compliance with its quotas.

"We will have the meeting, and then we will decide" what to do regarding output quotas, Iran's oil minister Rostam Qasemi said on arriving in Vienna on Tuesday.

"Whatever the decision will be, it will be made all together," he added.

The cartel based in Vienna meets periodically to set production levels, hoping that its decisions result in favourable market oil prices for its 12 members.