NEW YORK - Crude oil futures prices settled at a fresh eight-month low Wednesday ahead of a meeting to discuss oil output among the Organization of Petroleum Exporting Countries.
The group, consisting of the world's biggest oil exporters, is expected to keep production unchanged at historically high levels when it meets in Vienna Thursday.
Light, sweet crude for July delivery settled 70 cents, or 0.8%, lower at $82.62 a barrel on the New York Mercantile Exchange, its lowest settlement since Oct. 6. Brent crude on the ICE futures exchange settled 1 cent lower at $97.13, a fresh 17-month low.
Futures slumped as signs emerged that OPEC was leaning toward leaving its output ceiling unchanged. OPEC sources told Dow Jones Newswires that the group appeared to be coalescing around the status quo, even as some ministers complained of oversupply.
"People are starting to figure in that there's not going to be a change in production by OPEC, and that's dragging down the crude right now," said Carl Larry, president of trading-advisory firm Oil Outlooks and Opinions.
OPEC's production was 31.582 million barrels a day in May, the group said this week. That's nearly 1.6 million barrels a day more than the group's total production limit agreed upon in December.
The increase has been largely driven by higher Saudi oil production this year to around 10 million barrels a day.
"I expect the production ceiling to be rolled over, but this is all subject to our discussions," said Kuwait oil minister Hani Hussain.
OPEC's output decisions are influential in setting global oil and fuel prices. The group produces around a third of the world's oil supply and holds more than 80% of global proven oil reserves.
Crude oil prices have fallen more than 20% from their peak in the spring, as the deepening euro-zone crisis has spurred fears of slowing growth worldwide, while OPEC maintains high output.
Futures entered positive territory mid-way through the session after inventory data from the U.S. Energy Information Administration signaled that demand had improved in the world's biggest consumer.
The EIA said oil inventories last week fell 200,000 barrels.
Gasoline inventories last week fell 1.7 million barrels, while stocks of distillates, including heating oil and diesel, dropped 100,000 barrels. Refineries raised output by 0.1 percentage to 92% of capacity.
"That 92% utilization, that's real," said Tony Rosado, broker at GA Global Markets in New York. "They're using more crude. That's basically what that tells you."
Analysts had expected oil inventories to fall a larger 1.6 million barrels last week, according to a survey of analysts by Dow Jones Newswires. But gasoline inventories were seen rising 600,000 barrels, while distillates were expected to rise 900,000 barrels. Refinery runs were seen falling 0.1 percentage point to 90% of capacity.
The EIA's indirect measure of product demand rose 6.5% to its highest level since August, bucking a trend of weakening demand for petroleum products in the U.S.
Front-month July reformulated gasoline blendstock, or RBOB, settled 0.52 cent, or 0.2%, higher at $2.6554 a gallon. July heating oil settled 1.06 cents, or 0.4%, lower at $2.6109 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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