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Oil Heads for Weekly Gain on Speculation OPEC May Cut Production

Brent and West Texas Intermediate crude headed for this month’s first weekly increases as the Organization of Petroleum Exporting Countries considers cutting its production target next year.

Futures were little changed in London and poised for a 0.6 percent increase this week. OPEC, supplier of about 40 percent of the world’s oil, may reduce its daily quota by 500,000 barrels to 29.5 million in 2015, Secretary-General Abdalla El-Badri said in Vienna on Sept. 16. Libya halted output from the Sharara field after an attack at the Zawiya plant.

“The market appears to have formed a bit of a base,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone today. “We may also be getting close to a level where the market is a little nervous about taking more risk premium out of oil prices. There’s not a lot in there now and that leaves the price vulnerable to any external shocks.”

Brent for November settlement was at $97.68 a barrel on the London-based ICE Futures Europe exchange, down 2 cents at 2:45 p.m. Singapore time. Prices dropped 5.9 percent during the first two weeks of this month. The volume of all futures traded was about 57 percent below the 100-day average.

WTI for October delivery was down 4 cents at $93.03 a barrel in electronic trading on the New York Mercantile Exchange. Prices are 0.8 percent higher this week after falling 3.9 percent during the first two weeks of this month. The U.S. contract for November was at a discount of $5.73 to Brent for the same month, compared with $5.72 yesterday.

OPEC Output

Saudi Arabia cut its crude supply by 408,000 barrels a day in August, the biggest reduction since 2012, a submission made by the country to OPEC shows. Demand for OPEC’s oil will drop to 29.2 million barrels a day in 2015 from 29.5 million this year, the group said in a Sept. 10 report.

In Libya, a rocket exploded near a crude storage tank at the Zawiya plant on Sept. 15, according to National Oil Corp. The refinery connects to the Sharara field, the country’s biggest. The nation is working to restore output after a year of unrest reduced Libya to the smallest OPEC producer.

In the U.S., crude supplies have climbed to the highest level since 2012 for this time of the year as production surges because of the shale boom. Output rose by 248,000 barrels a day to 8.838 million during the week ended Sept. 12, the most since March 1986, according to the Energy Information Administration.