Friday 29 Mar 2024
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SINGAPORE (Nov 20): Brent crude held above $78 a barrel on Thursday as the market waited for news on possible cuts in oil output ahead of an OPEC meeting next week.

The benchmark was supported by speculation that China could implement stimulus measures to support its manufacturing sector after a private survey showed factory output contracted in November for the first time in six months.

According to Samir Kamal, Libya's OPEC governor and head of planning at the Libyan oil ministry, ministers from the oil producers' cartel will agree to scale back production to OPEC's own target of 30 million barrels a day at the Nov. 27 meeting.

That would result in a cut in output of between 250,000-600,000 barrels a day in an effort to buoy oil prices, which have fallen to a four-year low.

"The market has fallen to a level it is going to park at until it gets anything more definitive about OPEC," said Ric Spooner, chief market analyst at Sydney's CMC Markets. "That's what the market is waiting for."

Brent was down six cents at $78.04 a barrel as of 0732 GMT after closing 37 cents down in the previous session.

U.S. crude for December delivery was unchanged at $74.58 a barrel, after finishing down 3 cents on Wednesday. The December contract expires on Thursday.

The China flash HSBC/Markit manufacturing purchasing managers' index (PMI) fell to 50.0 in November from a final reading of 50.4 in October, below the 50.3 reading forecast by analysts.

A reading above 50 indicates expansion, while one below 50 points to contraction on a monthly basis.

"Exports and new orders were fairly soft and 49.5 (for the factory output sub-index) is in contractionary territory," said Ben Le Brun, market analyst at OptionsXpress in Sydney.

"There are enough trigger points for the People's Bank of China to pull some of the levers available out of their stable (to stimulate the economy)," he said.

The market was also waiting for a slew of economic data from the United States later on Thursday, including consumer prices for October.

Oil prices fell on Wednesday after the Federal Reserve released minutes of last month's policy meeting, which revealed concerns U.S. inflation could remain below target for "quite some time".

U.S. crude stockpiles unexpectedly rose by 2.6 million barrels last week, supported by an increase in oil imports, data from the U.S. Department of Energy's Energy Information Administration showed on Wednesday.

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