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NEW YORK (Bloomberg) -- Oil traded below $43 as Libya signaled it may raise output and as fears eased that Russia would retaliate against Turkey for downing its jet near the Syrian border. Futures in New York declined as much as 1.7%, paring this week’s 5.4% gain. Libya’s National Oil Corp. in Tripoli said it’s making progress to resume production after more than a year from two oil fields, including Sharara, its biggest. Russian President Vladimir Putin said his country is ready to participate in a broad coalition against the Islamic State and has ruled out military retaliation against Turkey. Oil has slumped about 35% the past year amid speculation a global surplus will be prolonged with U.S. inventories near a record and as the Organization of Petroleum Exporting Countries pumps above its quota to defend market share. OPEC members will gather Dec. 4 in Vienna, where Iran has said it will announce plans to boost production by 500,000 barrels a day. West Texas Intermediate for January delivery dropped as much as 75 cents to $42.29 a barrel on the New York Mercantile Exchange and was trading at $42.57 at 8:54 a.m. Seoul time. The contract hasn’t settled since Wednesday, when futures closed up 0.4% at $43.04. Thursday’s transactions will be booked with Friday’s for settlement purposes because of the U.S. Thanksgiving holiday. Brent for January settlement decreased 71 cents, or 1.5%, to $45.46 a barrel on the London-based ICE Futures Europe exchange on Thursday. The European benchmark crude ended the Wednesday session at a $3.13 premium to WTIReadmore
NEW YORK (Bloomberg) -- Oil pared its first weekly gain in a month on signs the global surplus will expand and as the dollar increased, reducing demand for commodities as an investment.
Futures fell 3.1% in New York. The U.S. currency rose on speculation the Federal Reserve will raise interest rates in December for the first time since 2006. The Shanghai Composite Index tumbled 5.5%, its biggest retreat since the depths of a $5 trillion rout in August. Prices also slipped as Libya sought to boost output and Russia ruled out military retaliation against Turkey for downing its jet near the Syrian border. Diesel futures fell to a six-year low.
Oil has slumped 37% in the past year as U.S. crude inventories climbed to near a record and the Organization of Petroleum Exporting Countries pumped above its quota to defend market share. Iran has said it will announce plans to expand output by 500,000 bopd when OPEC members gather to discuss policy Dec. 4 in Vienna.
"This is an oversupplied market," John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by phone. "Dollar strength continues to put downward pressure on commodities. The big drop in the Shanghai Composite Index and terror attacks in Europe add to worries about the Chinese and European economies."
West Texas Intermediate for January delivery dropped $1.33 to close at $41.71 a barrel on the New York Mercantile Exchange. There was no settlement Thursday because of the U.S. Thanksgiving holiday and trading ended early Friday, when all transactions were booked. Prices increased 3.3% this week.Brent for January settlement slipped 60 cents, or 1.3%, to end the session at $44.86 a barrel on the London- based ICE Futures Europe exchange. The contract climbed 0.4 percent this week. The European benchmark crude closed at a $3.15 premium to WTI. "The bears came in after the 5.5% drop in the Shanghai Composite Index," Bob Yawger, director of the futures division at Mizuho Securities USA in New York, said by phone. "The Chinese news is being looked at as a demand indicator."
Libya said it’s making progress to resume crude output at two fields after more than a year. A committee has met to resolve issues that have curbed supply from Sharara and Elephant, according to Mustafa Sanalla, chairman of National Oil Corp. in Tripoli. The fields have a combined capacity of 440,000 bopd and could resume full production within seven days of a decision to restart operations, he said by phone Thursday. "Any recovery in Libyan production, along with the expected return of Iranian barrels next year, would just add to the glut," Kilduff said.Russian President Vladimir Putin signaled his country will cooperate with the broader alliance against Islamic State after meeting French President Francois Hollande in Moscow on Thursday. While Russia began economic retaliation against Turkey in response to the shooting down of a Russian fighter jet near the Syrian border on Tuesday, it ruled out military action. Societe Generale SA cut its 2016 Brent forecast as it expects the market’s re-balancing to accelerate during the second half of the year. Brent will trade at $53.75 a barrel next year, down 65 cents from its previous estimate, analysts including Michael Wittner said in an e-mailed report.
Fuel futures prices declined after U.S. government data on Wednesday showed that inventories increased last week. Stockpiles of distillate fuel, a category that includes diesel and heating oil, rose 1.05 million barrels to 141.4 million, the Energy Information Administration said. Gasoline supplies climbed 2.48 million to 216.7 million. Diesel futures for December delivery dropped 5.03 cents, or 3.6%, to $1.3524 a gallon, the lowest settlement since April 2009. December gasoline fell 0.56 cent, or 0.4%, to close at $1.3905.
HOUSTON (Bloomberg) -- Oil service companies struggling with a slump in demand will need to act fast to bolster their balance sheets and make deals before capital becomes scarce, Norway’s largest bank says. More rig and offshore service companies will be forced to take action as demand has dried up, according to Ottar Ertzeid, DNB ASA’s head of investment banking. "It’s smart not waiting too long -- there can be limited availability for new capital," Ertzeid said in an interview in Oslo on Thursday. "There will be some winners in consolidations as there always are, so it’s interesting times both on restructuring and M&A the next couple of years." With Brent crude at about $45 a barrel and demand for rigs and vessels slumping, the Norwegian oil service industry has seen funding options shrink with the junk bond market virtually closed to the sector. “For regular bond issues it’s practically closed because the price will be higher than to issue equity," Ole Einar Stokstad, head of credit research at DNB, said in an interview. "Either demand must pick up from a sustained increase in oil prices or debt will have to be reduced in the companies. There must be some restructuring or consolidation." Reduced revenue and the higher probability of companies turning to the equity market to raise capital has seen the Oslo Boers OBX Oil Service Index slump 18 percent during the past 12 months. The DNB High Yield Norway Total Return Hedged Index has fallen more than 10 percent over the same period. Earlier this month offshore surveyor Petroleum Geo-Services ASA raised about 920 million kroner through selling new shares while Electromagnetic Geoservices ASA sold shares, bought back bonds and extended the maturity of a bond. Siem Offshore Inc. also raised about $100 million in a rights issue in September. “We see already that work has started but I don’t think you will see material transactions before next year," Ertzeid said. "It’s starting in 2016." Other investors are betting on the industry, including HitecVision AS, a private equity firm that bought stakes in Prosafe SE and Kvaerner ASA this month. The deals follow a series of transactions in Norway that included Russian billionaire Mikhail Fridman’s $1.6 billion purchase of EON SE’s Norwegian oil and gas assets. Ferd AS Invest doubled its stake in seismic surveyor Petroleum Geo-Services in December.Readmore