Oil Little Is Changed as OPEC Signals Satisfaction With Prices

Crude oil traded little changed as OPEC’s president said he was content with current prices, signaling the group may keep quotas unchanged when it meets next month.

Crude prices around $70 are “not bad” and are necessary to maintain investment, OPEC President Botelho de Vasconcelos told reporters in Angola yesterday. The Organization of Petroleum Exporting Countries, responsible for 40 percent of global supplies, is due to review production targets at a meeting on Sept. 9.

Crude oil for September delivery traded for $70.96 a barrel, 3 cents higher, in after-hours electronic trading on the New York Mercantile Exchange as of 8:51 a.m. London time. It earlier fell as much as 71 cents, or 1 percent, to $70.22 a barrel.

“OPEC should definitely be satisfied with the current prices, given that they have doubled this year,” said Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt. “Also, the kind of crude inventory levels we have now would be consistent with prices lower than $70 a barrel.”

Oil reached a five-week intraday high of $72.84 a barrel on Aug. 7, and then declined 1.4 percent to $70.93 a barrel, its lowest settlement in a week, as the dollar climbed and gasoline futures dropped the most in seven sessions.

“Oil’s looking a little bit vulnerable to some more downside in the first couple of days this week,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. The dollar’s rally “really undermines a lot of these commodities including oil,” he said.

Weak Demand

New York oil futures gained 87 percent in the past six months as rising equity markets buoyed investor confidence, and the falling U.S. dollar made commodities more attractive. Prices reached an eight-month high of $73.38 a barrel on June 30.

Brent crude oil for September settlement traded for $73.98 a barrel, 39 cents higher on London’s ICE Futures Europe exchange as of 8:50 a.m. local time.

Weak demand through late summer and the “massive overhang of stockpiles” in the U.S. may also limit any price gains from storms and hurricanes in the Gulf of Mexico, Hassall said.

U.S. gasoline demand usually peaks June through August. Refiners there cut production in the three weeks ended July 31. Gasoline stockpiles at that date were 2.9 percent higher than a year earlier, while distillate stocks were 24 percent higher. link....