Oil falls with other commodities after OPEC comments
New York (July 31) Oil prices fell on Friday as concern over global oversupply intensified after oil producers' cartel OPEC indicated there would be no cuts in production despite a huge global oversupply.
The fall mirrored a general sell-off in commodities on persistent worries about demand in China, the world's biggest user of energy and many key materials such as copper.
China's state planner said on Friday a slowing economy must not be allowed to morph into social risks as the volatile Chinese stock market fell again.
"All commodities are down," said Abhishek Deshpande, oil analyst at Natixis. "Commodities face weak demand, excess supplies and weakness in China. More weakness is ahead of us."
Benchmark North Sea Brent crude LCOc1 headed for its fifth consecutive weekly fall after comments on Thursday in Moscow by Abdullah al-Badri, secretary-general of the Organization of the Petroleum Exporting Countries.
Badri said rising demand would prevent a further fall in oil prices and suggested cuts in OPEC output would have little impact on the market.
Brent LCOc1 was down 50 cents at $52.81 a barrel by 1140 GMT (0740 EDT) after settling 7 cents lower in the previous session. U.S. light crude CLc1 was down 80 cents at $47.72 a barrel.
OPEC members produced around 31.25 million barrels per day (bpd) in the second quarter, about 3 million bpd more than daily demand, a Reuters survey showed this week.
The surplus oil has filled stockpiles around the world, driving prices down sharply. Both major crude oil benchmarks are down more than 50 percent from a year ago.
Data from the U.S. Energy Information Administration (EIA) this week showed U.S. oil stocks hit all-time highs for a third successive week at 1.969 billion barrels. Overall, U.S. stocks are up 145 million barrels from a year ago.
Commerzbank's head of commodities research in Frankfurt, Eugen Weinberg, said OPEC must eventually cut back on production to avoid much lower oil prices.
"We are also hopeful that OPEC will agree on a stricter quota discipline at its December meeting," Weinberg said.
Chart analysts say oil futures still look very weak.
Tamas Varga, analyst at London brokerage PVM Oil Associates, said a brief pause in the downtrend appeared to be over.
"Today hopefully will (tell us) if the relatively stable performance of the last two days is a correction, or the market actually is about to bottom out. From the technical perspective it is probably the former," Varga said.