Global oil futures lost more than a dollar on Monday after Saudi Arabia and Kuwait signaled a willingness to bear with lower prices to defend market share, although better-than-expected trade data from China pared the losses.
Contrary to market expectations, Kuwait said OPEC was unlikely to cut production to support prices, while Saudi Arabia has privately told oil market participants it could be comfortable with $80 for oil.
"Judging by the latest comments from Kuwait and Saudi Arabia, we expect more near-term downside ahead for oil prices amidst the ongoing global growth scare," Gordon Kwan, head of oil and gas research at Nomura, was quoted by Reuters as saying.
"Without a firm commitment to cut OPEC exports, China's increased demand alone is not enough to sustain a potential oil price rebound."
Brent crude oil briefly touched its lowest since December 2010 at $87.74 in early trade, but pared losses after the Chinese data to trade at $88.98 a barrel by Monday, down $1.23.
Growth in China's exports and imports trumped forecasts in September. China's crude oil imports in September rose 7.4% year on year an average 6.74 million barrels per day, the second highest on record, preliminary data released Monday by the General Administration of Customs showed.
"That's very good news for oil prices," Ishikura said, but he was cautious about whether China was really on the road to recovery as the global economic outlook remained gloomy.
Kuwait's oil minister, Ali al-Omair, was quoted as saying by state news agency KUNA on Sunday that $76-$77 a barrel might be the level that would end the oil price slide, since that was the cost of oil production in the United States and Russia. He also added that OPEC is unlikely to cut oil production in an effort to prop up prices because such a move would not necessarily be effective.
"I don't think today there is a chance that (OPEC) countries would reduce their production, especially since the target that OPEC has given itself is 30 million bpd, which we have not reached until now," Omair said, according to KUNA.
Oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to meet in Vienna on Nov. 27 to consider whether to adjust their output target of 30 million barrels per day (bpd) for early 2015.
Some OPEC members are clamoring for urgent production cuts to push global oil prices back up above $100 a barrel.
Saudi Arabia reported September production of 9.704 million barrels per day (bpd), up from 9.597 million in August, according to a monthly OPEC report issued on Friday.
The lack of a Saudi cut could add to perceptions of traders and analysts that the kingdom is looking to defend market share, not prices.
