20 November 2014 – Brent crude held above $78 a barrel on Thursday as the market waited for news on possible cuts in oil output ahead of next week’s Opec meeting and a private survey showed China’s factory output contracting for the first time in six months.
According to Samir Kamal, Libya’s Opec governor and head of planning at the Libyan oil ministry, ministers from the oil producers’ cartel will agree to scale back production to Opec’s own target of 30 million barrels a day at the 27 November meeting.
That would result in a cut in output of between 250,000-600,000 barrels per day in an effort to buoy oil prices, which have fallen to a four-year low.
“The market has fallen to a level it is going to park at until it gets anything more definitive about Opec,” said Ric Spooner, chief market analyst at Sydney’s CMC Markets. “That’s what the market is waiting for.”
Brent rose five cents to $78.15 a barrel early on Thursday after closing 37 cents down in the previous session.
US crude for December delivery fell 5 cents to $74.53 a barrel, after it finished down 3 cents on Wednesday.
The factory output survey in China added to signs that the world’s second-largest economy was still losing traction.
The China flash HSBC/Markit manufacturing purchasing managers’ index (PMI) fell to 50.0 from a final reading of 50.4 in October, below the 50.3 reading forecast by analysts.
A reading above 50 indicates expansion, while one below 50 points to contraction on a monthly basis.
“It could be a relief because it’s holding up in the face of a weaker property and construction sector,” Spooner said.
The market was also waiting for a slew of economic data from the US later on Thursday, including consumer prices for October.
Oil prices fell on Wednesday after the Federal Reserve released minutes of last month’s policy meeting, which revealed concerns US inflation could remain below target for “quite some time”.
US crude stockpiles unexpectedly rose by 2.6 million barrels last week, supported by an increase in oil imports, data from the US Department of Energy’s Energy Information Administration showed on Wednesday.