NEW YORK: Oil prices dipped on Monday (Nov 17) on news that Japan slipped back into recession and skepticism that OPEC will reach a deal to cut output.
US benchmark West Texas Intermediate for December delivery shed 18 cents to US$75.64 a barrel on the New York Mercantile Exchange. European benchmark Brent oil for January delivery slipped 10 cents to US$79.31 a barrel in London.
Confidence in the Japanese recovery took a hit when official data showed that gross domestic product for the world’s third largest economy shrank 0.4 per cent in the third quarter. That decline followed a revised 1.9 per cent contraction in the April-June quarter.
“With Japan falling back into a surprising recession, the whole Asian area comes under pressure,” said Carl Larry, director of oil and gas for Frost & Sullivan. “This will add to OPEC’s dilemma as it heads into its last meeting of the year.”
The Organisation of Petroleum Exporting Countries is set to meet in Vienna on Nov 27. Despite a drop of more than 25 per cent in oil prices since June, the cartel has been divided on whether to take action. Venezuela and Ecuador have called publicly for a cut, but key member Saudi Arabia has so far signalled resistance.
“There looks to have been some pickup in OPEC background discussions ahead of the group’s Nov 27 summit,” said Tim Evans, analyst at Citi Futures. “But the market remains skeptical that any effective action will be taken to spark a recovery in prices.”