Oil prices drop before U.S. data

West Texas Intermediate for January delivery dropped $1.08, or 2.5 percent, to $41.96 a barrel at 11:45 a.m. on the New York Mercantile Exchange.

Benchmark Brent oil traded 57 cents lower at $44.89 a barrel.

Strength in the greenback, which makes oil more expensive for holders of other currencies, joined with negative sentiment that kicked off earlier in the day due to disappointing Chinese economic data. “Nothing really bullish is out there”.

But reports that Russian Federation is not taking military action against Turkey in retaliation eased fears that the tense situation in the region could escalate and disrupt Middle East oil supplies.

So it may be with more than a little disbelief that market observers view the latest news from Saudi Arabia, even though the immediate reaction triggered nominal increases to Brent and WTI futures on Monday. While the booming USA output has tailed off this year, oil stockpiles remain near record highs.

Analysts said USA crude was also boosted by a fall in oil rigs, a sign that drillers were waiting for higher prices before returning to the well pad.

“Crude and product inventories are building in the USA with the market expected to remain oversupplied through the first half of 2016”, he said. An increase in tensions could also affect oil shipments: according to the US Energy Information Administration, 2.9 million barrels of crude oil per day were transported through the Bosporus from the Caspian Sea to the Mediterranean in 2009. A preliminary inventory report by industry group American Petroleum Institute had anticipated a 2.6-million barrel rise while a Reuters poll of analysts forecast a 1.2 million build. And, while most OPEC countries do not seem to be willing to cut down on their outputs – economies have to keep running, the largest producer in the world, Saudi Arabia, said it was willing to take the measures necessary to stabilize the market.

Mr. Wittner said he doesn’t believe there will be “any change in Saudi or OPEC policy“, when the 12-nation oil cartel meets in December. The contract gained 17 cents to $43.04 on Wednesday. They are up 5.3% so far this week, but have plunged 8.7% since the beginning of November. Earlier, the price fell to US$1,051.60, the lowest since February 2010.

Neanda Salvaterra and Georgi Kantchev contributed to this article.