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Brent crude rebounded after OPEC triggered the biggest one-day plunge in three years yesterday by failing to cut its output in response to a glut.
Brent and West Texas Intermediate headed for their biggest weekly drops since 2011. OPEC will maintain its collective output target at 30 million barrels a day, Saudi Arabia's Oil Minister Ali Al-Naimi said after discussions in Vienna yesterday. The group's policy will ensure a crash in the U.S. shale industry, predicted Leonid Fedun, the vice president of Russia's OAO Lukoil.
"We have a situation where OPEC is prepared to live with low oil prices," said Harry Tchilinguirian, BNP Paribas SA's London-based head of commodity markets strategy. "OPEC is forfeiting its role as a swing supplier to balance the market, and is giving back the role to market mechanism."
Brent for January settlement gained 67 cents, or 0.9 percent, to $73.25 a barrel at 9:34 a.m. New York time on the London-based ICE Futures Europe exchange. The contract dropped $5.17 to $72.58 yesterday, the lowest close since August 2010. Prices are down 8.9 percent this week, heading for the biggest weekly loss since May 2011. Brent has decreased 15 percent this month and 34 percent in 2014.
WTI for January delivery declined $4.25, or 5.8 percent, to $69.44 on the New York Mercantile Exchange, compared with the Nov. 26 close. There was no floor trading yesterday because of the Thanksgiving holiday and transactions from yesterday will be booked today for settlement purposes. Floor trading will close at 1:45 p.m. today. Prices are down 9.3 percent this week, also the most since 2011.
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