Oil prices tread water ahead of US data, Opec meeting

[NEW YORK] Oil prices moved sideways on Tuesday as traders awaited the weekly US petroleum report and an Opec meeting seen as unlikely to reduce output despite persistently weak prices.

US benchmark West Texas Intermediate for delivery in January rose 20 cents to US$41.85 a barrel on the New York Mercantile Exchange.

Brent North Sea crude for January, the international benchmark for oil, fell to US$44.44 a barrel in London, down 17 cents from Monday's settlement.

"The crude oil market is trading little-changed as traders back off on establishing new positions ahead of Friday's Opec meeting, extending what has been a two-week period of sideways chop," said Tim Evans of Citi Futures.

Remarks by Opec kingpin Saudi Arabia indicating a willingness to discuss changing the cartel's high production was met with skepticism from traders.

"We will discuss... and then decide" on output, Saudi Arabia's oil minister Ali al-Naimi told reporters on arrival in Vienna ahead of Friday's meeting of the 12-nation Organisation of the Petroleum Exporting Countries.

Mr Evans said that the oil market "clearly has its doubts whether they will adopt production restraint to make room for a likely 2016 increase in Iranian production or to rebalance the market in support of higher prices."

Despite global oversupply, Saudi Arabia has been determined to hold onto market share in the face of strong competition from US shale oil production.

Iran is expected to increase its oil exports after Western sanctions are lifted under a deal reached with major world powers in July to curb its nuclear programme.

Iran's deputy foreign minister Abbas Araghchi said last week his country expects the deal to come into force in early January, allowing it to resume a high level of exports.

Traders meanwhile expect a drop in high US commercial crude inventories in Wednesday's weekly report from the Department of Energy.

According to a Bloomberg News survey of experts, US crude stockpiles likely decreased by 800,000 barrels last week. Inventories increased by 1.0 million barrels to 488.2 million barrels in the week ending November 20, up 27.5 per cent from a year ago.

AFP