Oil slips towards $78 as market doubts Opec cut

Brent crude oil fell towards $78 a barrel after Saudi Arabia’s oil minister said the market “will stabilise itself eventually”, ahead of a key OPEC meeting to discuss production in response to falling prices.

Traders understood the comment by Saudi Arabian oil minister Ali al-Naimi to mean the cartel would not cut output when ministers from the Organization of the Petroleum Exporting Countries (OPEC) meet on Thursday in Vienna.

"He effectively ruled out an output cut," Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt, told Reuters Global Oil Forum.

Oil prices have dropped roughly 30 per cent since June and predictions for the OPEC meeting range from a large output cut to no action at all. Heavyweight Saudi Arabia has kept the market guessing as to what it will do.

Benchmark Brent futures were down 15 cents at $78.18 a barrel. US crude was at $73.85, down 24 cents.

“People now will jump on the bandwagon on these comments and push prices lower,” said Fritsch. “We will move towards $75 in the course of this week.”

Iran said OPEC needed to show unity in the face of growing oversupply in oil markets and that non-OPEC members also should participate in any output cuts.

Iranian Oil Minister Bijan Zangeneh said on Wednesday some OPEC members, but not Iran itself, believed it was time to defend market share in the face of growing supplies from non-OPEC nations.

Weak economic data from Asia’s biggest economies further suppressed prices.

“The US economy is doing great but most everyone else is struggling, creating more downside than upside risks to growth,” US-based PIRA Energy Group said in a weekly report.

India’s economic growth probably slowed to around 5 per cent in the three months to September, slipping from 5.7 per cent in the previous quarter.

Asia’s top economy, China, cut interest rates last week, indicating slowing growth, while Japan’s economy slipped into recession in the third quarter.

The United States upgraded its reading on third quarter gross domestic product to 3.9 per cent on Tuesday from 3.5 per cent reported last month.

Reuters