Venezuela warns OPEC of oil price drop to mid-$20s

Later today, oil traders await the weekly API crude stockpiles report for fresh insight on the crude reserves situation while the US GDP numbers due later today will also have some bearing on the price-action.

The official news agency of Saudi Arabia released a statement saying the government was prepared to cooperate with other oil producers to ensure a stable market. The situation has not been helped by the strong dollar, which recorded seven-month highs at the start of the week.

“To increase Iran’s oil production in the global market after the lifting of sanctions, we don’t need permission from OPEC (the Organization of the Petroleum Exporting Countries) or any other organization”, Iran’s oil minister, Bijan Zanganeh was quoted as saying by IRNA on the sidelines of the meeting of the Gas Exporting Countries Forum (GECF) in Tehran.

“Ahead of the December 4th OPEC meeting, it s a positive sign that the Saudis are talking this up right now”, said Carl Larry of Frost & Sullivan.

USA commercial crude oil stocks probably gained 1.1 million barrels for the week ended Nov 20, according to a preliminary Reuters survey of five analysts on Monday.

Crude prices rose as much as 1 per cent yesterday after Saudi Arabia’s pledge to work on price stability offset some worries about the global oil market glut.

“The markets would likely rebound only if they saw a fall in U.S. crude inventories, while declining United States crude output and seasonal demand provide some support to oil at low prices”.

US crude’s West Texas Intermediate (WTI) futures increased 32 cents or 0.77 percent at $42.07 a barrel as of 0048 GMT after hitting $42.18 a barrel earlier in the session.

Benchmark January Brent futures were last down 23 cents at $44.43 a barrel.

Oil fell earlier amid a broader commodity rout while Venezuela predicted prices may tumble to the mid-$US20s a barrel unless OPEC tackles the global surplus. When asked how low oil prices could go in 2016 if OPEC doesn’t change its policy, he said: “Mid-20s”.

In nearly all of its investor presentations this year, EOG has said it can turn a profit at prices at or below the prevailing oil price at the time of the presentation.

Saudi Arabia also reclaimed its position from Russian Federation as the largest crude supplier to China, where it sold 3.99 million tonnes in October, 0.8 per cent more than in September, data from the Beijing-based General Administration of Customs showed Monday.

“Given how low prices are it will take a lot to get them to move lower”, Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone.