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Oil prices fall as Opec is unlikely to cut production
[SINGAPORE] Oil prices fell in early Asian trading on Thursday as it became unlikely that producer club Opec would announce large output cuts during a meeting this week, and after Chinese and US stocks increased.
The Gulf producers within the Organization of the Petroleum Exporting Countries (Opec) - Saudi Arabia, Kuwait, Qatar and the United Arab Emirates - said on Wednesday that they will not propose an output cut during the offical meeting on Thursday, reducing the likelihood of joint action by Opec to prop up prices that have sunk by a third since June.
Benchmark Brent futures were down 50 cents at US$77.25 a barrel at 0205 GMT, close to four-year lows, and US crude was 56 cents weaker as US$73.15 a barrel.
Yet analysts said caution would remain in the market until the Opec meeting officially concludes on Thursday. "Crude oil prices declined as the market awaits the outcome of the Opec meeting. Saudi Arabia for the first time provided a firmer stance on their view on cutting production, indicating they believe the oil market will stabilise itself," ANZ bank said in a morning note on Thursday. "This comes as crude oil inventories in the USA rose for the second week, increasing by 1.9 million barrels, according to EIA," it added.
In China, the government has quietly increased its strategic petroleum reserves (SPR) to around 30 days' worth of imports, double the amount its official plan has revealed, as the world's top energy consumer takes advantage of a dive in prices to strengthen its position in the global oil market.