Oil price falls ahead of Opec meeting

The price of oil has fallen as Opec oil producers prepare for their meeting on Thursday and data showed crude stocks rose last week. Inventories of commercial US crude oil increased by 1.9 million barrels from the previous week, according to the US Energy Information Administration.

Brent crude slid 58 cents to $77.75 a barrel after the data. The drop came as Saudi Arabia indicated it would not push for output cuts to help push up oil prices.US crude finished Wednesday's business down 40 cents at $73.69 a barrel.
           

The oil market will "stabilise itself eventually", said Saudi Oil Minister Ali al-Naimi.

Saudi Arabia is the largest producer of the 12 members of the Organization of the Petroleum Exporting Countries (Opec).


The oil cartel is split over how to react to the sharp slump in oil prices.
The price of Brent crude has plunged 30% since June, triggered by a sharp rise in US shale oil output and weakening global demand. There is speculation that on Thursday Opec could announce its first cut in oil production since 2009 in an attempt to support the oil price.

Among the Opec members, Venezuela and Iraq have called for output cuts. However, fellow Opec member United Arab Emirates's (UAE) Oil Minister Suhail bin Mohammed al-Mazroui appeared to side with Saudi Arabia, indicating it would not push for a cut in production, saying "the market will fix itself ultimately"."We are not going to panic, this is not the first time, this is not a crisis that requires us to panic ... we have seen [prices] way lower. We are not interested in the short fixes because we know they will not last," Mr al-Mazroui told Reuters.

Russia says 'no'

The responses from Saudi Arabia and UAE come a day after non-Opec member Russia, which produces an estimated 11% of global oil, said it would not co-operate with any production cut.Following a meeting with Saudi Arabia, Venezuela and Mexico representatives, Russian Energy Minister Alexander Novak said the country's energy companies would produce around the same amount of oil next year as they did in 2014.He told reporters in Moscow he was sceptical that Opec would decide on Thursday to cut output quotas.


The heated debate over how to react to the sharp fall in oil prices has led to some suggesting that Thursday's meeting could last longer much longer than usual. "It might take a bit longer than the ordinary meetings," said one delegate. "They must agree, even if they have to stay here for two days. It is a matter of death or survival for budgets."

US economy grows faster than first forecast

The US economy grew much faster in the third quarter than first reported, official figures have shown.It expanded at an annualised rate of 3.9% between July and September, up from the 3.5% first estimated by the Bureau of Economic Analysis.The rise, which follows a strong second quarter, means the US has seen its strongest two consecutive quarters of growth for a decade.

Consumer spending was the biggest driver of the raised estimate.It grew by 2.2% according to the latest estimate, which was higher than the initial calculation of 1.8%.Consumer spending is closely watched as it accounts for 70% of US gross domestic product (GDP).

Moving on

The data suggests the US has shrugged off the slow start to the year when heavy snow saw the economy shrink."The question of whether the economy is accelerating or will accelerate is no longer a question; we can say somewhat definitively that the economy has already accelerated," said Dan Greenhaus, chief strategist at BTIG.Meanwhile, a separate survey, showed US house prices rose by more than expected in September.

The closely-watched S&P/Case Shiller index jumped 4.9% year-on-year.The index, which measures single-family home prices in 20 cities, showed that prices were up 0.3% month-on-month on a seasonally adjusted basis."With the economy looking better than a year ago, the housing outlook for 2015 is stable to slightly better," said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.

March rate rise?

Capital Economics economist Paul Dales said the strong GDP upgrade underlined his expectation that the Federal Reserve could raise interest rates as soon as March next year. "Most people were expecting a downward revision so this was a real surprise," he added. At the end of October, the US Federal Reserve said it would not raise interest rates for a "considerable time".

It also ended its quantitative easing (QE) stimulus programme of buying financial assets and creating new money to pay for them, aimed at stimulating the economy. However, it said it was confident the US economic recovery would continue, despite a global economic slowdown.