LONDON: Brent crude oil fell toward $112 a barrel as OPEC left its output target for the first half of 2014 unchanged, though the US benchmark rose as data showed stockpiles fell in the world’s largest oil consumer.
The 12-member Organization of the Petroleum Exporting Countries agreed to renew for the first half of 2014 a collective oil production cap of 30 million barrels a day.
US crude oil was boosted by data from the US government Energy Information Administration (EIA) showing crude stocks in the US fell by 5.6 million barrels last week. A Reuters poll had forecast a build of 300,000 barrels.
Brent crude for January delivery was 7 cents lower at $112.55 a barrel by 1547 GMT, recovering from an earlier low of $111.46. US crude was up 91 cents at $97.03 per barrel, having earlier touched a five-week high of $97.53.
Brent’s premium over US crude narrowed to about $15.70 a barrel. Crude stocks at Cushing, Oklahoma, delivery point of the US crude oil future, fell by 18,000 barrels last week, the EIA data showed.
The OPEC agreement came despite two of its members, Iraq and Iran, having set high output targets for the year ahead.
“This could be storing up tensions for the second half of next year, particularly if Iraq manages to bring on more production than it has this year,” said Richard Mallinson, geopolitical risk analyst at Energy Aspects.
“But for the first half of the year, I don’t see a pressing need for OPEC to cut back.”
The EIA data reinforced figures from the American Petroleum Institute (API) that showed a drop of 12.4 million barrels in domestic inventories. That snapped a 10-week streak of builds that had added nearly 36 million barrels.
This followed TransCanada Corp’s announcement that it would begin operations at its Keystone XL pipeline on Jan. 3, allowing stockpiles of crude oil inventories at the Cushing oil hub to move to the US Gulf Coast, where a large share of the country’s refining capacity is concentrated.
“This is the start of a period of draws in US crude stocks,” said Bjarne Schieldrop, chief commodity analyst at SEB Bank.
Positive data from the United States had earlier helped to pare losses for Brent crude oil. Data showed US private employers added 215,000 jobs in November, topping economists’ expectations, and private sector economic activity bounced back in November, lifted by expansion in the services sector.