SINGAPORE: Brent crude oil prices fell towards $79.20 on Tuesday as traders lowered their expectation of a significant output cut by OPEC, but the market received some support from an uptick in German GDP and hopes of strengthening US data later in the day.
Oil ministers from the Organization of Petroleum Exporting Countries (OPEC) meet on Thursday in Vienna and some are imploring the group to cut 1 million barrels per day or more to support prices that have fallen about 30 percent since June on the back of rising supply being met by cooling demand.
But analysts said they were doubtful whether such a cut would be agreed.
"Investors appear to have lowered the probability of a production cut at this week's OPEC summit," ANZ bank said, although traders said prices received slight support from economic figures.
A sharp rise in German private consumption more than compensated for stubborn weakness in investment, helping Europe's biggest economy post modest growth in the third quarter and avoid recession, data showed on Tuesday.
Preliminary US data, to be published at 1330 GMT, is likely to show that the country's GDP increased at a 3.3 percent annual pace.
"Positive GDP growth in major countries would likely mean increased consumption of crude oil," Singapore-based Phillip Capital said on Tuesday.
Brent was trading at $79.21 a barrel at 0810 GMT, down 59 cents, while US crude was 21 cents lower at $75.57 a barrel.
SPLIT OPEC
During this week's OPEC meeting, diverging interests within the producers' club are expected to become apparent, with some countries keen to defend high prices and others aiming to maintain market share against surging non-OPEC producers like the United States.
Libya, Venezuela, Iran and Ecuador have called for OPEC and its 12 member states to cut production, while Kuwait has said an output reduction is unlikely.
Key will be what the club's biggest producer and exporter Saudi Arabia decides, with some analysts expecting no price supporting action from the kingdom.
"The rapid growth now being achieved in non-OPEC production means it faces the risk that even a large cut to supply may not be enough to support prices and could simply result in lost market share and revenue," Barclays Bank said.
"Saudi Arabia's response so far to falling oil prices is an acknowledgment that it is less able to influence oil prices than at any time over the past decade," it added.
Some commodity fund managers believe oil prices could slide to $60 per barrel if OPEC does not agree to a significant output cut.
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