Brent steady above $109 ahead of EU summit
Singapore, December 8, 2011
Brent crude was steady above $109 on Thursday, after a sharp fall in the previous session, as the market stayed cautious ahead of a summit to deal with Europe's sovereign debt crisis.
The market is also looking to the European Central Bank's (ECB) final monetary policy meeting of the year later on Thursday, which is expected to deliver a 25 basis points rate cut.
Brent crude fell 7 cents to $109.46 a barrel after settling Wednesday $1.28 lower at $109.53 a barrel.
US crude was down 1 cent to $100.49 a barrel.
"Fundamentals are better than expected and the US and Chinese economies seem to be stabilising, but trading will be cautious before Friday's Europe meeting," said Tetsu Emori, a fund manager with Astramax Company in Tokyo.
"The market's direction will be determined after the summit, and a good result will send prices higher."
Market sentiment softened following an unexpected rise in US crude inventories, which climbed by 1.34 million barrels last week, versus a forecast for a 600,000-barrel drawdown, government data showed on Wednesday.
The numbers also contradicted industry data released on Tuesday showing US crude stocks fell by 5 million barrels.
"(The EIA) data at times were internally inconsistent, notably relative to the crude stock build," said analysts at BNP Paribas in a research note.
"We believe the extent of the reported crude stock build is likely to be revised downwards, or reversed, once more complete monthly data is subsequently published."
Asian shares fell on Thursday as doubts persisted over the ability of European policy makers to deliver a concrete plan to tackle the euro zone crisis.
Market participants also weighed the impact of news that top oil exporter Saudi Arabia said it was pumping oil at the highest rate for decades in a signal that it intends to meet customer demand with more output if necessary.
Some analysts were sceptical about the accuracy of the data, and noted that the move might push prices higher as Saudi Arabia's spare production capacity narrows.
"The Saudis might want to show that they are the ones holding the majority spare capacity. Some might think that more supply will ease prices, but their idle capacity is now smaller and prices could rise if there is some supply disruption," said Emori.
The Organisation of the Petroleum Exporting Countries is due to meet on December 14 in Vienna to discuss output policy for early 2012. – Reuters