Oil prices up in Asia ahead of OPEC meeting, United States report

Brent crude oil futures gained some ground on Friday but remained near three-month lows as the pressure of a persistent supply glut limited optimism for a price recovery.

Secretary general of Opec Abdalla El-Badri has previously warned under-investment could one day push oil prices as high as $200 per barrel. Output from the 12-member OPEC bloc fell in October, led by Saudi Arabia’s drop in demand from its domestic power plants and refineries.

The Saudi remarks came as oil prices barely held above two-and-a-half-month lows, and were greeted with a mix of enthusiasm and scepticism.

But concern over global oil supply re-emerged on Monday in the runup to OPEC’s December 4 meeting, as analysts pointed out that the statement does not mark a shift in Saudi policy or a commitment to slash output.

Benchmark front-month Brent futures for January had fallen 38 cents, or 0.85%, to $44.28 a barrel as of 0133 GMT, after it ending up 48 cents at $44.66 a barrel on Friday.

Global oil production is outpacing demand following a boom in USA shale oil production and after a decision by the Organization of Petroleum Exporting Countries past year not to cut production.

“Record levels of crude oil in storage with no let-up in production are likely to keep prices in a range in the coming weeks”, said Sanjeev Gupta, head of EY’s oil and gas practice for Asia-Pacific.

Oil prices rallied Monday after Saudi Arabia announced it was ready to work with other countries to stabilize prices.

Analysts have noted that according to their data crude inventories across the United States rose by 1.1 million barrels last week as market intelligence firm Genscape reported a build of 2.2 million barrels of US crude at the Cushing, Oklahoma delivery point.

The 12-nation oil cartel is scheduled to meet on December 4 in Vienna but few in the market expect OPEC to deviate from its strategy. “As it became clear that this was nothing new, the market returned to negative territory”.

“The Saudis have said numerous times that they are willing to work with both OPEC and non-OPEC producers”, Bob Yawger, director of the futures division at Mizuho Securities USA in NY, said by phone. The West Texas Intermediate contract for the same month, the USA marker grade, lost as much as 2.2 percent to $40.96 a barrel.

Slowing US crude oil production and lower crude oil prices could support crude oil prices.