Members of the Organization of Petroleum Exporting Countries including Iran and Saudi Arabia agreed that the group should set a production ceiling of 30 million barrels a day, an OPEC delegate said.
The group may not allocate individual quotas to each of the 12 nations because there may be disagreement on how the total oil output should be distributed, the person said, declining to be identified because the matter hasn’t been decided.
Oil ministers arrived in Vienna this week for their meeting today, when they will decide output levels for the first half of 2012. OPEC’s last gathering in June broke up without consensus when six members including Iran and Venezuela opposed a push to pump more oil by Saudi Arabia and three other Gulf nations, which went ahead with an increase to make up for Libyan supplies lost during an armed rebellion to oust then leader Muammar Qaddafi. The group will begin discussions at 10 a.m. local time and a press conference is scheduled for 4 p.m.
“The meetings were good,” Iran’s Oil Minister Rostam Qasemi said after holding bilateral talks with his Saudi Arabian counterpart Ali al-Naimi. “There is coordination. There won’t be a production increase.” Saudi Arabia and Iran are OPEC’s two biggest producers.
‘Happy’ With Output
Saudi Arabian Oil Minister Ali al-Naimi said he’s happy with OPEC’s current output amid demand from “all over.” The world’s biggest crude exporter pumped 10.047 million barrels a day last month, he said the most in at least three decades.
Iran, the second-largest OPEC producer, expects oil prices to fall next year unless the group’s members comply with output quotas and rein in supplies to accommodate rising exports from Libya and Iraq, the Persian state’s OPEC Governor Mohammad Ali Khatibi said.
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BOE’s Dale Says U.K. May Shrink as Officials Debate Need for More Stimulus
Bank of England Chief Economist Spencer Dale said the U.K. economy may be facing at least one quarter of contraction before a “gentle recovery” in the second half of next year.
“If I expect to see broadly flat growth, there must be a possibility that I see one or two quarters of negative growth,” Dale, 44, said in an interview in London yesterday. “For the very large majority of companies and families in our country, what really matters is getting growth up to more normal levels so we can get unemployment coming down again and companies’ order books back up to more normal levels.”
The Bank of England started a four-month program of bond purchases in October in response to the weakening recovery, and policy makers forecast that inflation will slow to below their 2 percent target in late 2012, indicating more stimulus may be needed. Dale, who ended a six-month call to raise the key interest rate in August, said he isn’t as convinced as some of his colleagues that inflation will undershoot the goal.
“There are risks on both sides of the inflation environment, they’re not just one-sided,” Dale said. “I do expect inflation to fall, but my view about the risks to being above or below the target are a little more balanced than the Monetary Policy Committee’s best collective judgment.”
Inflation slowed to 4.8 percent in November from 5 percent in October, data yesterday showed, and Dale said he sees it easing “sharply” in the first half of 2012.
“If inflation turns out to be more persistent than we expect,” that “will have implications for the future path of monetary policy,” he said.
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China Money-Supply Growth at Weakest Pace in Decade Shows Slowdown Risks
China’s lending slowed in November and money supply grew the least in a decade, highlighting the risk of a deeper slowdown in the world’s second-biggest economy.
New local-currency lending was 562.2 billion yuan ($88 billion), the People’s Bank of China said on its website today. That compares with 587 billion yuan in October. M2, a measure of money supply, rose 12.7 percent, the least since May 2001.
China’s leaders may take further steps to sustain the expansion as inflation cools and export growth weakens. The People’s Bank of China lowered lenders’ reserve requirements for the first time since 2008 effective Dec. 5, a “decisive” shift in policy stance that will support a lending pickup in coming months, according to London-based Capital Economics Ltd.
“Inflation is no longer a constraint on monetary policy,” Wang Tao, a Hong Kong-based economist with UBS AG said before the release. “Further weakness in real economic growth, such as exports, industrial production, and construction, will trigger more monetary easing.”
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India Inflation Slows to Lowest in One Year, Easing Interest-Rate Pressure
India’s inflation slowed to the lowest level in a year, boosting the central bank’s scope to support growth by pausing its record interest-rate increases.
The benchmark wholesale-price index rose 9.11 percent in November from a year earlier, the commerce ministry said in a statement in New Delhi today, compared with a 9.73 percent jump in October. The median estimate of 26 economists in a Bloomberg News survey was for a 9.02 percent gain.
Asian policy makers from China to Indonesia have either cut borrowing costs or kept them on hold to shield their economies as Europe’s debt crisis threatens to trigger a global slump. The Reserve Bank of India may leave rates unchanged this week after industrial production shrank and as the government struggles to ease foreign investment rules to spur expansion.
“Today’s inflation print makes the RBI’s case even stronger to maintain status quo on rates,” said Anubhuti Sahay, a Mumbai-based economist at Standard Chartered Plc. “Weakening growth will find space in the policy statement, but they are unlikely to completely remove inflation from their radar.”
Sahay expects the Reserve Bank to keep its repurchase rate at 8.5 percent in the Dec. 16 policy meeting. The central bank, which says its objective is to slow inflation to 3 percent, expects price gains to ease to 7 percent by March 31.
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Retail Sales Climb Less Than Forecast
Retail sales rose in November at the slowest pace in five months, indicating American consumers were trying to live within their means heading into the holiday shopping season as wages dropped.
The 0.2 percent gain in purchases fell short of the 0.6 percent median forecast of economists surveyed by Bloomberg News and followed increases in the prior two months that were larger than previously estimated, according to data from the Commerce Department today in Washington. Other reports showed inventories climbed in October and job openings fell.
Demand for autos, the latest fashions and electronics propelled the increase in spending last month, while households cut back on groceries and restaurant meals, showing how limited job and income gains are holding consumers back. Retailers like J.C. Penney Co. are pushing discounts to drum up business, a sign of a lack of inflation that allowed the Federal Reserve today to hold interest rates near zero.
“Sales are growing, but they just aren’t accelerating,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York. “There have been some real slight hints of improvement in the labor market, but until we get sustained growth in income, spending is going to be moderate.”
U.S. stocks fell after the Fed’s final policy meeting of the year. The Standard & Poor’s 500 Index decreased 0.9 percent to 1,225.73 at the close in New York after having been up as much as 1.1 percent. Treasury securities rose, sending the yield on the benchmark 10-year note down to 1.97 percent from 2.01 percent late yesterday.
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U.S. Stocks Fall as Dollar, Treasuries Gain Following Fed Policy Statement
U.S. stocks fell, while the dollar and Treasuries rallied, as the Federal Reserve refrained from taking more steps to stimulate the economy and concern grew that European leaders won’t agree on ways to expand the region’s bailout capacities. Gold slumped to a seven-week low.
The Standard & Poor’s 500 Index lost 0.9 percent to 1,225.73 at 4 p.m. in New York, wiping out a gain of as much as 1.1 percent. The Dollar Index rose 1 percent, topping 80 (DXY) for the first time since January, as the euro fell on reports that German Chancellor Angela Merkel rejected boosting Europe’s permanent bailout fund. Ten-year Treasury yields slipped five basis points to 1.97 percent following stronger-than-average demand at an auction. The S&P GSCI Index of commodities rose 1.5 percent after surging as much as 2.3 percent.
Stocks headed lower as Fed policy makers said the U.S. is maintaining growth even as the global economy slows and defied speculation from some investors that the central bank would signal plans for a third round of large-scale asset purchases known as quantitative easing, or QE3. The Fed said it would continue its exchange of $400 billion of short-term debt with long-term securities to lengthen the average maturity of its holdings, a move dubbed Operation Twist.
“Operation Twist remains in effect but there was no mention of a QE3, or further coordinated action with the ECB, which may have disappointed investors,” Mark Bronzo, who helps manage $23.5 billion at Security Global Investors in Irvington, New York, said in an e-mail, referring to coordinated action with the European Central Bank.
