By Timothy Puko and Georgi Kantchev
Crude-oil prices fell Monday, the first day of trading after
several OPEC members defended their refusal to take drastic action
to prop up prices.
Oil officials from several leading members of the Organization
of the Petroleum Exporting Countries on Sunday blamed producers
outside of the group for the glut of oil on the market that has
depressed prices. Oil prices have now fallen by nearly half since
mid-June as U.S. shale producers battle Saudi Arabia and its Middle
Eastern allies for market share.
Light, sweet crude for February delivery was down $1.45, or
2.5%, to $55.68 a barrel on The New York Mercantile Exchange after
rallying earlier in the session by more than a percentage point.
The February contract for Brent crude, the global benchmark, fell
recently by $1.03, or 1.7%, to $60.35 a barrel on London's ICE
Futures exchange, after flirting with $63 in morning trade.
"The reality of Saudi Arabia and (United Arab Emirates) saying,
'We're cool,' has taken over. It's still a bearish market," said
Kyle Cooper, managing director of research at IAF Advisors, a
Houston consulting firm. "It comes down to a battle between U.S.
shale and Saudi Arabia."
Speaking at an energy conference in Abu Dhabi on Sunday, Saudi
Arabia's oil minister, Ali al-Naimi, blamed a lack of coordination
among non-OPEC producers, along with speculators and misleading
information, for the price slump.
According to Mr. al-Naimi, who is OPEC's secretary-general and
its most influential voice, the current market situation is
temporary and prices will rebound.
Mr. al-Naimi's comments were echoed Monday by Iraq's oil
minister, who said that OPEC remains united in its decision not to
rein in production but to let the market decide the oil price.
Prices have plummeted since OPEC decided on Nov. 27 to keep its
production ceiling unchanged.
"The market doesn't have the momentum to sustain gains right
now," said Kash Kamal, research analyst at Sucden Financial.
According to Mr. Kamal, the comments by the officials provided some
excuse for traders to enter long positions, but they quickly
realized that fundamentals haven't changed. "The market is still
under pressure, still oversupplied. It's business as usual."
Volatility in the oil market rose in December with the OVX index
rising to its highest level since the inception of the series in
2012, the National Australia Bank said in a note. The OVX index
measures the market's expectation of 30-day volatility of WTI crude
prices.
Last week provided a practical primer on volatility with a
pattern emerging in which early gains have been whittled away over
the course of the day. On Thursday, crude had rallied by as much as
3% in early trade only to see the gains pared as negative sentiment
overwhelmed the market.
Despite a rally on Friday, the price WTI crude fell 2.2% for the
week, the fourth consecutive week of declines. During those four
weeks WTI lost more than 26%, the largest percentage decline for
that time period since the week ended Dec. 26, 2008.
Monday's early gains appeared to suffer the same fate, with an
early rally sputtering by midday in Europe.
Nymex reformulated gasoline blendstock for January--the
benchmark gasoline contract--was down 1.17 cents, or 0.8% at
$1.5478 a gallon. January diesel lost 0.7 cent, or 0.4%, to $1.9552
a gallon.
Sarah Kent and Summer Said contributed to this article
Write to Georgi Kantchev at georgi.kantchev@wsj.com
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