Crude Falls Near 4-Year Lows Amid Mixed Signals From OPEC

West Texas Intermediate and Brent crudes fell, approaching four-year lows, on speculation OPEC won’t do enough to curb a supply glut.

Futures dropped as much as 1.1 percent in New York after Saudi Oil Minister Ali Al-Naimi said tumbling crude prices will stabilize. Saudi Arabia, the world’s largest oil exporter, didn’t agree with Russia, Venezuela and Mexico to curb output at a meeting yesterday in Vienna.

Crude has collapsed into a bear market amid the highest U.S. output in three decades and signs of slowing demand growth. A Bloomberg News survey showed 20 analysts were evenly divided on whether the Organization of Petroleum Exporting Countries will cut supply. The 12-member group, which pumps about 40 percent of the world’s oil, will discuss its official production target of 30 million barrels a day at tomorrow’s meeting.

“This is a headline driven market,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. “We are looking for signs of what OPEC is going to do tomorrow and every statement is going to be looked at for clues.”

WTI for January delivery declined 49 cents, or 0.7 percent, to $73.60 a barrel at 10:22 a.m. on the New York Mercantile Exchange. The contract dropped to $74.09 yesterday, the lowest close since September 2010. Total volume traded was 18 percent below the 100-day average for the time of day. Prices have decreased 25 percent this year.

Market Oversupplied

Brent for January settlement slipped 63 cents, or 0.8 percent, to $77.70 a barrel on the London-based ICE Futures Europe exchange. Volume was 3.2 percent lower than the 100-day average. The contract has tumbled 30 percent in 2014. The European benchmark crude traded at a $4.12 premium to WTI.

Iran, OPEC’s fifth-largest producer, will neither cut its oil production nor ask Saudi Arabia to do so, Iranian Oil Minister Bijan Namdar Zanganeh told reporters in Vienna before a meeting with Al-Naimi. Iran also held talks with Venezuela today, he said.

The oil market is clearly oversupplied and managing this will require a contribution from producers outside OPEC, Zanganeh said. Talks in Vienna yesterday between Venezuela, Saudi Arabia and non-OPEC producers Russia and Mexico didn’t result in a joint commitment to reduce production, according to Rafael Ramirez, Venezuela’s foreign minister and representative to OPEC.

Venezuela Diplomacy

Russia and Mexico, together with OPEC members Saudi Arabia and Venezuela, produced 27.8 million barrels a day of oil last year, according to data from BP Plc. Global output was 86.8 million a day, said the company. OPEC pumped 30.97 million a day in October, surpassing its collective target for a fifth straight month, data compiled by Bloomberg show.

“Supply is exceeding demand but not critically and it can’t lower oil prices in the long term,” Igor Sechin, the chief executive officer of OAO Rosneft, told Bloomberg TV in Vienna. For Russia, even a drop below $60 a barrel “isn’t so dramatic for us that it would require an immediate supply cut.”

A government report today is projected to show that U.S. crude stockpiles increased by 250,000 barrels last week, according to the median of 10 analyst estimates in a Bloomberg survey. The report will probably show U.S. refineries boosted operating rates for a fourth week, the survey showed.

The Energy Information Administration will probably report that gasoline inventories rose 1.5 million barrels in the week ended Nov. 21, based on the median of analyst responses. Supplies of distillate fuel, a category that includes heating oil and diesel, are projected to have decreased 900,000 barrels.