Crude Dips as OPEC Waffles

Iran's oil minister says the cartel hasn't decided whether to cut production at its Dec. 14 meeting.
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Updated from 11 a.m. EST

Crude oil futures lost ground Monday on mixed messages from OPEC about further production cuts and brimming domestic fuel supplies.

The Iranian oil minister said Monday that OPEC had not yet made a decision whether to cut production at its next meeting on Dec. 14, though the Qatar and Algerian oil ministers said otherwise. Abdullah al-Attiyah, the Qatar oil minister, told

Reuters

that the cartel may trim 500,000 to 1 million barrels per day.

Last month, the Organization of the Petroleum Exporting Countries opted to trim output by 1.2 million barrels a day beginning this month in an effort to boost slumping oil prices above $60 a barrel. Although prices have since drooped below that level, Mohammed Barkindo, the group's acting secretary general, said the markets should be more patient.

"The market is wrong about OPEC's commitment," Barkindo told

Reuters

. "We should at least wait for one month to assess the impact of OPEC's decision."

It generally takes about one month for OPEC shipments to reach European and Asian customers.

Barkindo reiterated that all OPEC members have gone along with the cut and have reduced output. Iranian officials today confirmed they had reduced production by 176,000 barrels per day. There have been conflicting reports on whether the cartel's members have trimmed exports or maintained them so they could continue raking in lofty oil revenue.

Last week, Oil Movements, a London-based consultancy that tracks oil tankers, said OPEC shipments would rise in November, suggesting some members may not be following the 1.2 production cut and actually ramping up output. Yet Petrologistics in Geneva differed and said exports would dip by 1.1 million barrels per day this month.

Robust inventory levels have also helped keep a lid on oil prices and muffled OPEC's recent cutback. Stockpiles of crude and distillates are 4% and 6% higher than last year, respectively. Distillates include heating oil and jet fuel.

All the hostages at an

Eni SpA

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oil facility in Nigeria were released over the weekend, allowing the Italian oil company to kick start production. The 50,000-barrel unit had been closed for two weeks. Oil companies operating in Nigeria have become the target of rebel attacks this year. Militants in the Niger Delta, the source of most of the country's oil, are attempting to pressure the federal government into giving them a share of the country's oil revenues.

Light, sweet crude for January delivery gave back 17 cents to settle at $58.80 a barrel. Heating oil and unleaded gasoline each gained 1 cent to $1.67 a gallon and $1.55 a gallon, respectively.Gasoline prices were perking up after

Exxon Mobil

(XOM) - Get Report

said it would shutter a gasoline production unit at its Baytown refinery in Texas, the country's largest, for repairs. Exxon did not say when it would reopen. Shares of Exxon Mobil, the largest publicly traded energy company, were recently down 0.5% at $72.75.

Warm weather predictions pressured natural gas prices down 16 cents to settle at $8.01 per million British thermal units. The National Weather Service expects warmer-than-average temperatures to blanket the Midwest, Southeast and Northeast over the next week. Mild temperatures drive down demand for natural gas, which is used by utilities to generate electricity.

The New York Mercantile Exchange will be closed on Thursday and Friday, so trading is likely to be subdued this week. Traders typically don't like to make big bets before a holiday weekend, because prices can shift in overseas markets that are still open.

In stock market action, shares of drillers and refiners were losing 0.5% as measured by the Amex Oil Index, led by

Hess

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,

Sunoco

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, and

Valero Energy

(REP)

down as much as 1.8% each.