By Mark Shenk and Samantha ZeeDec. 2 (Bloomberg) -- Crude oil fell for a third day after the Organization of Petroleum Exporting Countries deferred a decision to reduce output until its next meeting on Dec. 17.
OPEC said it will use the time to gauge the impact of a 1.5 million-barrel-a-day reduction agreed to in October. The group will trim production at its next meeting, the secretary general said today. Slowing growth means demand will be “much lower” than expected a month ago, OPEC said after a Nov. 29 gathering.
“OPEC sent a Valentine to the bears,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “Rather than announce a production cut over the weekend, they said they might cut when they next meet on Dec. 17. It looks like they missed an opportunity to support prices by making a cut sooner rather than later.”
Crude oil for January delivery fell 60 cents to $48.68 a barrel at 11:04 a.m. Sydney time in after-hours trading on the New York Mercantile Exchange. January futures declined $5.15, or 9.5 percent, to $49.28 a barrel yesterday, the lowest settlement since May 23, 2005.
Oil prices have tumbled 67 percent since reaching a record $147.27 on July 11 as the U.S., Europe and Japan face their first simultaneous recession since World War II.
Gasoline for January delivery declined 9.84 cents, or 8.1 percent, to settle at $1.1112 a gallon in New York yesterday.
Pump prices in the U.S. have followed futures lower. Regular gasoline, averaged nationwide, dropped 0.5 cent to $1.82 a gallon, AAA, the country’s largest motorist organization, said on its Web site yesterday. It’s the lowest price since January 2005. The fuel has tumbled 56 percent from the record $4.114 a gallon reached on July 17.
OPEC ministers put off debate on a second cut in output in as many months during the Nov. 29 meeting in Cairo. The group will reduce crude production when it meets in Oran, Algeria, this month, OPEC Secretary General Abdalla el-Badri said. Oil demand is likely to drop further next year, he said.
“For sure there will be action” at the meeting, el-Badri told reporters in Tehran yesterday, declining to specify the amount of output that may be curbed.
“The market is oversupplied,” el-Badri said. “We are seeing the stocks are very high.”
Prices around $75 a barrel would be “fair” and would support investment in new fields, Saudi Arabian Oil Minister Ali al-Naimi said over the weekend. The global market is oversupplied by more than 2 million barrels a day, Iranian Oil Minister Gholamhossein Nozari said.
“OPEC’s postponement of a decision on output combined with the fact that there’s nothing out there to take cheer from about the economy is sending prices lower,” said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. “The path of least resistance remains down.”
The U.S. economy entered a recession in December 2007, the panel that dates American business cycles said yesterday. The declaration was made by the National Bureau of Economic Research, a private, nonprofit group of economists based in Cambridge, Massachusetts. The last time the U.S. was in a recession was from March through November 2001, according to NBER.
Manufacturing in the U.S. contracted in November at the fastest pace in 26 years, putting American factories at the forefront of a global industrial slump, a report showed today. The U.S. is the biggest oil consumer.
The Institute for Supply Management’s factory index dropped to 36.2, the lowest level since 1982, the Tempe, Arizona-based group reported. A reading of 50 is the dividing line between expansion and contraction.
South Korean Imports
South Korea imported 73 million barrels of crude last month, down 6.5 percent from a year earlier, the Ministry of Knowledge Economy said in an e-mailed statement. It was the third month that imports declined. South Korea is the world’s fifth-biggest oil importer, according to the U.S. Energy Department.
Brent crude oil for January settlement fell $5.52, or 10 percent, to settle at $47.97 a barrel on London’s ICE Futures Europe exchange. It was the lowest settlement since May 19, 2005.
To contact the reporter on this story: Mark Shenk in New York at firstname.lastname@example.org; Samantha Zee in Los Angeles at email@example.com