Oil dips as OPEC to stand pat, fundamentals weigh

By Robert Gibbons

NEW YORK (BestGrowthStock) – Oil prices slipped a second straight session on Tuesday as OPEC signaled it will keep output targets steady when the group meets this week and investors worried about weak fundamentals highlighted by high inventories and lackluster demand.

The U.S. Federal Reserve released minutes from its September meeting, which showed Fed officials believed the struggling recovery might need further help soon and they discussed how that might be done.

The dollar slumped after the Fed minutes release, though the greenback’s early strength had helped pressure oil prices. A stronger dollar makes dollar-denominated commodities more expensive for buyers using other currencies and strengthens the value of greenbacks paid producers.

The dollar’s late drop was not enough to offset sentiment that economic recovery remains tepid and expectations that U.S. crude oil stocks rose last week, with crude and refined oil stocks already above year-ago levels.

U.S. crude for November delivery fell 54 cents, or 0.66 percent, to settle at $81.67 per barrel, having traded from $80.88 to $82.33.

In London, ICE Brent November crude fell 22 cents to settle at $83.50 a barrel.

“Crude finished lower because people took a breather, despite the dollar weakening after the Fed minutes,” said Chris Dillman, analyst at Tradition Energy in Stamford, Connecticut.

“There are not enough bids when crude gets up around $83 and people are not convinced oil needs to be this high given the fundamentals.”

A couple of economic reports released on Tuesday pointed to an economic recovery still struggling.

The Conference Board’s gauge of the U.S. job market fell in September, suggesting job growth will remain slow and more losses are possible.

MasterCard said U.S. weekly retail gasoline demand fell 0.7 percent last week versus the previous week and was only 0.1 percent better than the year-ago period.

OPEC MEETS THURSDAY

Saudi Arabian Oil Minister Ali al-Naimi on Monday said he was happy with the oil market, as he arrived in Vienna for Thursday’s meeting of the Organization of the Petroleum Exporting Countries, the group’s first in seven months.

He described crude prices between $70 and $80 as “ideal.”

On Tuesday, a senior Gulf OPEC delegate told Reuters that oil prices slightly above $80 a barrel were not a threat to the world economy, although he declined to say at what point the oil price could affect recovery.

U.S. INVENTORIES

An expanded Reuters poll on Tuesday yielded a forecast for U.S. crude stockpiles to be up for a second straight week, by 1.2 million barrels in the week to October 8, due to higher imports. Distillate and gasoline stockpiles were expected to be lower.

Industry group the American Petroleum Institute will issue its oil inventory report on Wednesday at 4:30 p.m. EDT (2030 GMT), delayed a day by Monday’s U.S. Columbus Day holiday.

The government’s report from the U.S. Energy Information Administration is due on Thursday at 11 a.m. EDT (1500 GMT), also delayed a day by the holiday.

FRENCH STRIKES

Europe’s refined products prices continued to be supported as French oil refineries cut output and a nationwide strike further choked supplies. Workers at major ports and eight out of 12 French refineries were on strike.

A spokesman for French oil-sector lobby UFIP said French fuel stations could face shortages in just over a week, if an oil port strike continues.

(Additional reporting by Zaida Espana and Joe Brock in London and Alejandro Barbajosa in Singapore; Editing by David Gregorio)

Oil dips as OPEC to stand pat, fundamentals weigh