Oil drops on skepticism of big OPEC output cut

Global oil prices fell Monday following a choppy session amid skepticism that OPEC would move aggressively to lift prices this week.
US benchmark West Texas Intermediate for January delivery dipped 73 cents to $75.78 a barrel on the New York Mercantile Exchange.
European benchmark Brent oil for January delivery dropped 68 cents to $79.68 a barrel in London.
Traders focused on Vienna where the Organization of Petroleum Exporting Countries meets on Thursday to weigh action in response to the 30 percent drop in prices since June.
Bart Melek, head of commodity strategy at TD Securities, said comments by Saudi oil minister Ali al-Naimi Monday suggest "maybe they (OPEC) are not going to do that much and we are going to get a chronic oversupply."
Naimi, arriving in Vienna, said the current market dynamics were not unusual.  "Is the first time we have oversupply?" he said, Dow Jones Newswires reported.
A note from Barclays titled "The end of OPEC's golden age?"  suggested the cartel would not take significant action, in part because a big output cut would harm economic growth and employment in Saudi Arabia.
Saudi Arabia may also be reluctant to cut because "they are uncertain about the price response," of such a move, Barclays said. A large OPEC cut might not be viewed as credible by the market, while a small cut might be viewed as credible but inconsequential.
Goldman Sachs said OPEC's interest is to "share the burden of balancing the oil market with US shale oil production," which is costlier to produce than Middle Eastern oil and not profitable at low prices.
A big cut would lift prices, benefitting US producers at the expense of OPEC. The consensus view has shifted to "only expecting a modest cut," Goldman said.