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Dec. 12 (Bloomberg) -- Oil slid in New York, extending last week’s decline, as concern Europe will be unable to tame its debt crisis countered Iran’s calls for production cuts before an OPEC meeting this week.
Futures dropped as much as 0.4 percent after falling 1.5 percent in the five days to Dec. 9. European leaders will have to quickly implement an agreement to strengthen budget rules to regain market confidence, according to German Finance Minister Wolfgang Schaeuble. Iran’s Oil Minister Rostam Qasemi said some members of the Organization of Petroleum Exporting Countries should reduce output to accommodate the return of shipments from Libya and gains in Iraqi supply.
“The European package was something that was expected but there are concerns about implementation and enforceability,” said Jonathan Barratt, a managing director at Commodity Broking Services Pty in Sydney, who predicts OPEC will keep quotas unchanged at its Dec. 14 meeting in Vienna. “Oil is in a range, a break through $100 sees it back to $102.”
Crude for January delivery fell as much as 37 cents to $99.04 a barrel in electronic trading on the New York Mercantile Exchange. It was at $99.17 at 2:18 p.m. Singapore time. Prices are up 8.5 percent this year after climbing 15 percent in 2010.
Brent oil for January settlement on the London-based ICE Futures Europe exchange lost as much as 48 cents, or 0.4 percent, to $108.14 a barrel. The European benchmark contract was at a premium of $9.06 to New York-traded West Texas Intermediate grade. The spread was a record $27.88 on Oct. 14.
Euro-area policy makers will focus on implementing last week’s accord to strengthen budget rules and provide an additional 200 billion euros ($267 billion) to the euro war chest as quickly as possible, Schaeuble told ARD television yesterday.
The 27 member states of the European Union accounted for 16 percent of global oil demand last year, based on BP Plc’s annual Statistical Review of World Energy. The U.S., the world’s largest oil user, consumed 19.1 million barrels a day, or 21 percent of the total.
Oil in New York has technical support along the middle Bollinger Band on the daily chart, according to data compiled by Bloomberg. This indicator is around $97.81 a barrel today. Buy orders tend to be clustered near chart-support levels.
Iran will propose that OPEC, which raised output this year in the absence of Libyan exports, should scale back supply, Qasemi said, according to the state-run Mehr news agency yesterday. Eleven of the group’s members, all except Iraq, have formal production targets.
Libya pumped 500,000 barrels a day on average in November, from a low of 45,000 barrels in the midst of the rebellion against former leader Muammar Qaddafi. Iraq’s daily output last month reached 2.7 million barrels, according to Bloomberg estimates.
Saudi Arabia, the world’s biggest state-owned exporter, will supply full volumes of crude under term contracts to buyers in Asia and Europe next month, according to refinery officials with knowledge of the matter.
--With assistance from Yee Kai Pin in Singapore. Editors: Christian Schmollinger, Alexander Kwiatkowski
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