December 14th, 2011

Crude oil futures traded near the lowest price in more than five weeks in New York after OPEC raised its output ceiling and Europe’s debt crisis worsened, threatening a recession that may curb demand for commodities.

Crude oil futures were little changed after dropping yesterday the most since September after members of the Organization of Petroleum Exporting Countries meeting in Vienna agreed to raise their output target to 30 million barrels a day. Prices were also depressed by events in Europe, with Italy’s five-year bond yield climbing to a 14-year high at an auction. Ernst & Young LLP said the euro region is likely to slip back into recession.

“Europe and OPEC are the drivers,” said Ric Spooner, a chief analyst at CMC Markets in Sydney. “European leaders haven’t addressed the issue of potential contagion of the sovereign debt problems. That creates the possibility that confidence will be a problem for international economies, and a lack of confidence has the impact of dampening demand for most things, including commodities.”

Crude oil futures for January delivery was at $94.96 a barrel, up 1 cent, in electronic trading on the New York Mercantile Exchange at 12:45 p.m. Sydney time. The contract yesterday slid 5.2 percent to $94.95, the lowest close since Nov. 4. Prices are 3.9 percent higher this year after climbing 15 percent in 2010.

Brent oil for January settlement was up 6 cents today after falling $4.48 yesterday, or 4.1 percent, to $105.02 a barrel on the London-based ICE Futures Europe exchange. The contract expires today. The more-actively traded February future fell $4.83 yesterday to $104.25. The European benchmark contract’s premium to West Texas Intermediate closed at $10.07, compared with a record $27.88 on Oct. 14.

Crude Oil: OPEC Target

OPEC changed its production target for the first time in three years, replacing previous quotas for members excluding Iraq that totaled 24.845 million barrels a day. The group won’t use specific national targets for its 12 members as long as Libyan exports are recovering from the country’s armed conflict, OPEC Secretary General Abdalla el-Badri said.

U.S. crude stockpiles declined 1.9 million barrels last week, according to a report from the Energy Department yesterday. It was the first drop in three weeks. They were forecast to decline 2.5 million barrels, according to the median of 12 analyst estimates in a Bloomberg News survey.

Gasoline supplies gained 3.8 million barrels to 218.8 million barrels, Energy Department data shows. They were estimated to rise 1.2 million barrels, according to the survey. Distillate inventories, a category that includes heating oil and diesel, climbed 480,000 barrels compared with a projection for a 1 million barrel increase.

- Ben Sharples in Melbourne at Bloomberg.