Oil caps third weekly loss as USA stockpiles sustain glut

Elsewhere, crude oil for delivery in January on the NY Mercantile Exchange declined 54 cents, or 1.29%, to trade at $41.36 a barrel after being down by as much as 3.5% earlier in the day. Saudi Arabia meanwhile continues to hold out in terms of market share, taking back its position from Russian Federation in October as the largest supplier of crude oil to China, according to Beijing’s latest customs administration report. While a few discount the measure’s usefulness, others in the market use it as a gauge of how production might rise or fall in the future. Opec should make room for increased Iranian crude production within its ceiling of 30 million barrels a day, the nation’s Oil Minister Bijan Namdar Zanganeh said.

The organization is scheduled to meet on December 4 in Vienna.

A few investors interpreted this as a sign that Saudi Arabia, the most influential member of OPEC, could push the oil cartel to curb its output and increase prices at its coming meeting December 4. The European benchmark crude traded at a premium of US$3 to WTI.

Brent oil settled 1 per cent higher on Friday on pre-weekend short-covering, while United States crude settled lower but just above the $40-per-barrel support it has struggled to defend after a surge in inventories.

One oil strategist on Wall Street said that no one really believes that Saudi Arabia will bow to the ongoing pressure of cutting output. But prices quickly erased those gains as traders looked at commodity markets, which were battered Monday as the US dollar hit a seven-month high.

“The Saudis’ past promises on working for price stability has led to nothing, so it wasn’t surprising there was as much disbelief as initial excitement over today’s announcement”, said John Kilduff, partner at NY energy hedge fund Again Capital. USA crude stockpiles rose an eighth week, leaving supplies more than 100 million barrels above the five-year average for this time of year, government data showed on Wednesday. We are destroying the price of crude oil.

Brent futures settled up 17 cents at $44.83 a barrel.

“We still think that a low 40s NYMEX WTI is a floor from which the market can rally through the winter”, said BNP Paribas said in a research note.

Gasoline futures recently rose 2.8% to $1.327 a gallon. We need to send to the market a signal of stabilization, and that signal of stabilization is not what we are doing now…