Oil falls on Kuwait, Saudi signals, but Chinese data lends support

Global oil futures lost more than a dollar on Monday after Saudi Arabia and Kuwait signalled a willingness to bear with lower prices to defend market share, although better-than-expected trade data from China pared the losses.
Contrary to market expectations, Kuwait said OPEC was unlikely to cut production to support prices, while Saudi Arabia has privately told oil market participants it could be comfortable with $80 for oil.
"Judging by the latest comments from Kuwait and Saudi Arabia, we expect more near-term downside ahead for oil prices amidst the ongoing global growth scare," said Gordon Kwan, head of oil and gas research at Nomura.
"Without a firm commitment to cut OPEC exports, China's increased demand alone is not enough to sustain a potential oil price rebound."
Brent crude touched its lowest since December 2010 at $87.74 in early deals, but pared losses after the Chinese data to trade at $88.68 a barrel by 0654 GMT, down $1.53 on the day.
U.S. crude was down $1.40 at $84.42 after slipping to a low of $84.25. On Friday the contract touched $83.59, the lowest since July 2012.
Some stop-loss selling may have been triggered, leading to the sharp falls in prices early on Monday, said Rikio Ishikura, a commodity broker at Newedge Japan.
Growth in China's exports and imports trumped forecasts in September, and the world's largest energy consumer increased crude oil imports by 9.5 per cent from August.
"That's very good news for oil prices," Ishikura said, but he was cautious about whether China was really on the road to recovery as the global economic outlook remained gloomy.
According to chart analysts, oil prices are on the brink of sliding another $10 or more. They say a drop of over 20 per cent since June has wiped out key support levels and left behind a "technical graveyard". Nomura's Kwan said West Texas Intermediate may breach $80 a barrel while Brent could fall below $85 ahead of an OPEC meeting next month.
"At these lower levels, we will see more Chinese strategic buying and marginal well production cuts to stabilise prices," he said.
Kuwait's oil minister, Ali al-Omair, was quoted as saying by state news agency KUNA on Sunday that $76-$77 a barrel might be the level that would end the oil price slide, since that was the cost of oil production in the United States and Russia.
Oil ministers from the Organisation of the Petroleum Exporting Countries (OPEC) are scheduled to meet in Vienna on Nov. 27 to consider whether to adjust their output target of 30 million barrels per day (bpd) for early 2015. Some OPEC members are clamouring for urgent production cuts to push global oil prices back up above $100 a barrel.
Saudi Arabia reported September production of 9.704 million barrels per day (bpd), up from 9.597 million in August, according to a monthly OPEC report issued on Friday.
The lack of a Saudi cut could add to perceptions of traders and analysts that the kingdom is looking to defend market share, not prices.