US crude oil prices dip after unexpected rise in stockpiles

During the 168th meeting, the OPEC countries are expected to consider the official request by Indonesia to reactivate its full membership of the organization. USA output has soared in recent years due to new drilling technologies, and OPEC decided at a meeting in November 2014 not to cut its own production in response.

Crude futures rose almost 2 per cent on Thursday, lifted by a weaker dollar and a report sourced to a senior OPEC delegate that Saudi Arabia would next year propose a deal to balance oil markets with non-OPEC help.

OPEC kingpin Saudi Arabia and other Gulf state members are defying calls to cut output despite tumbling prices in a bid to preserve market share and fend off competition from North American shale oil.

The data also showed that USA oil output rose to 9.2 million barrels a day last week.

Should OPEC surprise markets and agree to a reduction, Iran still plans to pump out additional crude from the beginning of 2016.

Iranian Oil Minister Bijan Zangeneh said that some members had made proposals that could be discussed on Friday but he would not disclose them. “Just adding Indonesia is most probably what will happen”.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at $41.31 a barrel at 0222 GMT, up $0.23 in the Globex electronic session.

“In the absence of any Saudi gestures, the complex will quickly revert back to mounting commercial inventories and a strong US dollar in forcing values lower next week, where our long standing $37.75 price target is apt to be achieved”, said Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch & Associates.

Zanganeh said the aim was to first increase output by half a million barrels a day in early 2016, eventually rising to one million barrels extra that would bring its daily total to around 3.8 million.

“The Saudi’s slight concession makes a cut at Friday’s meeting very unlikely since Russian Federation, the biggest non-OPEC oil producer is not yet on board, but does raise the possibility of it happening next year”.

However remote the chance of a major rethink at Friday’s meeting, the report serves as a timely reminder that Saudi Arabia’s policy of maintaining high output, regardless of the effect on prices, was only ever a short-term measure, said Standard Chartered commodities analyst and long-time OPEC watcher Paul Horsnell. “Expect to step into another year of oversupply, with a lot of oil moving into storages and continued pressure on prices”, Platts’ Asia Editorial Director Vandana Hari said.

“There can’t be any agreement because non-OPEC players won’t cut”, said Tamas Varga of brokerage PVM.