By Christian Berthelsen and Nicole Friedman
Benchmark U.S. oil prices sank to a new four-year low on Tuesday
amid signs of a lack of agreement among OPEC members on a need to
cut production and shore up the market.
The Organization of the Petroleum Exporting Countries is
scheduled to meet in Vienna on Thursday to seek a consensus on
whether and how to reduce output and stabilize prices, which have
fallen more than 30% since mid-June amid growing global oil
surplus. But signals sent by individual member nations thus far
suggest there is little agreement on the matter, including how it
would be achieved.
On Tuesday, member nations Saudi Arabia and Venezuela apparently
held an impromptu meeting with nonmembers Mexico and Russia, but
the group broke up without announcing any kind of proposal. Igor
Sechin, head of Russian state oil company Rosneft, said that Russia
couldn't immediately cut production anyway and that "the current
price level isn't critical for us."
Oil futures had been treading water early in the trading session
ahead of Thursday's meeting but dived after those developments. The
U.S. contract for January settled down $1.69, or 2.2%, at $74.09 a
barrel on the New York Mercantile Exchange, its lowest level since
Sept. 21, 2010, while the global Brent contract for January fell
$1.35, or 1.7%, to $78.33 a barrel on the ICE Futures Europe
exchange.
"I think the market's taking that negatively as if there aren't
going to be any production cutbacks from OPEC," said Andrew Lebow,
a trader at Jefferies. "The market today is just growing somewhat
anxious about whether there are going to be production cuts."
The market pared losses in midafternoon after The Wall Street
Journal reported there may be preliminary agreement among member
nations, including de facto leader Saudi Arabia, to more strictly
enforce the existing production quota of 30 million barrels a day.
Such a move could remove at least 300,000 barrels from the market
based on recent data.
Still, it would fall short of the 1 million-barrel cut analysts
say is necessary to stabilize the global supply-and-demand balance,
and thorny questions remain about how the reduction would be
apportioned among members and enforced. The market gave back gains
as it faded into the close.
In refined product markets, December gasoline futures lost 0.16
cent per gallon, or 0.1%, to settle at $2.0318 a gallon on the
Nymex. December heating oil lost 0.07 cent to settle at $2.3948 a
gallon.
Benoît Faucon, Summer Said and Sarah Kent contributed to this
article.
Write to Christian Berthelsen at
christian.berthelsen@wsj.com
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