Oil edges down as OPEC seen holding output ceiling
Global oil prices fell Thursday as traders deemed that the OPEC cartel was unlikely to trim output at its key production meeting next week.
Nearing midday, Brent North Sea crude for delivery in January dipped 40 cents to $77.70 a barrel.
US benchmark West Texas Intermediate for December slid 25 cents to $74.33 per barrel.
"The Brent price fell ... below the $78 per barrel mark because any major cut in OPEC production is regarded as increasingly unlikely," said Commerzbank analysts.
"The minimum consensus that appears likely to be reached at OPEC's meeting is a commitment to better comply with the official production target of 30 million barrels per day."
The Organization of the Petroleum Exporting Countries (OPEC), which will meet in Vienna on November 27, pumps about a third of global crude and currently produces just under 31 million bpd. That is around one million more than its official target.
"The market is keenly watching the outcome of the OPEC meeting next week," said Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at business consultancy EY.
Gulf members of OPEC, led by kingpin member Saudi Arabia, are poised to reject production cuts unless they are guaranteed market share in a highly competitive market, analysts said.
Analysts say the stance of Gulf nations will be crucial for a positive decision on reducing supplies to boost prices, which have fallen around 30 percent since June.
Saudi Arabia, Qatar, the United Arab Emirates and Kuwait together pump a total 16.2 million barrels per day, or 52 percent of the 12-member cartel's total output.
They account for two thirds of the group's exports, according to figures from OPEC and other agencies.
"It is extremely unlikely for Gulf states to accept output cuts unless other OPEC members take the initiative... They need assurances other OPEC or non-OPEC producers won't fill the gap," Kuwaiti oil expert Kamel al-Harami said.
"It is not in the interest of the Gulf states to cut output because they risk losing highly valuable market share," the former oil executive said.
OPEC members Venezuela, Ecuador and Iran have so far indicated a preference for an output reduction in order to defend prices.
Sentiment also soured on Thursday as weak Chinese manufacturing data stoked demand worries in the world's top energy consuming nation.
Manufacturing activity in China stagnated in November, British banking giant HSBC said Thursday, warning of "significant" pressures on the world's second-largest economy as its key purchasing managers' index (PMI) hit a six-month low.
HSBC's preliminary PMI for the month came in at the 50.0 breakeven point dividing expansion and contraction, the bank said in a statement.
It was lower than October's 50.4 and was the weakest reading since May's 49.4, according to the bank's data.
"China PMI data only goes to highlight uncertainty of global (oil) demand," added analyst Michael van Dulken at trading firm Accendo Markets.
The index tracks activity in China's factories and workshops and is a closely watched indicator of the health of the economy, a key driver of global growth.