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By Bloomberg

West Texas Intermediate retreated after the biggest gain since September amid speculation a drop in Saudi Arabian oil supplies isn't a signal that OPEC's largest producer is cutting output. Brent slid in London.

Futures fell as much as 0.9 percent in New York and were poised for a fourth weekly decline. Saudi Arabia's shipments to global markets shrank last month even as its production increased, a person familiar with the kingdom's oil policy said. Crude has collapsed into a bear market amid rising supplies as leading members of the Organization of Petroleum Exporting Countries resisted calls to reduce output, even as the U.S. pumps at the fastest pace in almost three decades.

"The market is widely believing that OPEC won't cut its production next month," Will Yun, a commodities analyst at Hyundai Futures Corp. in Seoul, said by phone today. "The price level we're at is what OPEC intends to stay, in order to squeeze profits in the U.S. where the output increase is a threat to Middle East producers."

WTI for December delivery dropped as much as 77 cents to $81.32 a barrel in electronic trading on the New York Mercantile Exchange and was at $81.65 at 2:55 p.m. Singapore time. The contract climbed $1.57 to $82.09 yesterday. The volume of all futures traded was about 15 percent below the 100-day average. Prices are down 1.3 percent this week and 17 percent in 2014.

Brent for December settlement decreased as much as 68 cents, or 0.8 percent, to $86.15 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $4.81 to WTI, compared with $4.10 at the end of last week.

Saudi Policy

Saudi Arabia supplied 9.36 million barrels a day to markets in September, said the person familiar with its policy. The figure doesn't include the amount of oil stored. Production was 9.7 million barrels a day last month, up from almost 9.6 million in August, the person said. That's the same as OPEC reported in its most recent assessment on Oct. 10.

The supply reduction reflects a weak market rather than a new output policy, according to Julian Lee, a Bloomberg oil strategist who has worked in the industry for 25 years. It indicates Saudi Arabia put unsold barrels into storage, he said.

Banks including BNP Paribas SA and Bank of America Corp. have predicted the price rout may be over, in part because they expect OPEC to cut production. The 12-member group, responsible for about 40 percent of the world's supply, is scheduled to meet on Nov. 27 in Vienna.

Crude stockpiles in the U.S., the world's biggest oil consumer, expanded by 7.11 million barrels to 377.7 million last week, the highest level since July, the Energy Information Administration reported on Oct. 22. Output averaged 8.93 million barrels a day, according to the Energy Department's statistical arm. That's down 0.2 percent from the prior seven days, when it reached the fastest pace since June 1985.