Oil prices dropped on Friday as much as 4 percent, dragged down by uncertainty over whether the Organisation of the Petroleum Exporting Countries (OPEC) will reach an output deal.
Futures extended early losses after Saudi Arabia said it will not attend talks on Monday with non-OPEC producers to discuss supply cuts.
Brent crude oil futures were trading at $47.02, down $1.98, or 4 percent, by 1:35 p.m. ET (1835 GMT). U.S. West Texas Intermediate (WTI) crude futures settled down $1.90, or 4 percent, at $46.06 per barrel.
Overall activity was thin after the U.S. Thanksgiving holiday and ahead of the weekend.
Top OPEC oil exporter Saudi Arabia has told the producer group it will not attend talks on Monday with non-OPEC producers to discuss limiting supply, OPEC sources said, as it wants to focus on having consensus within the organization first.
“I think Saudi’s announcement it would not to go to the meeting drove the initial sell-off,” said Tariq Zahir, managing member at Tyche Capital in New York. “There has to be a substantial cut and it has to be something that the street will believe.”
OPEC is due to meet on Nov. 30 to coordinate a cut, potentially with non-OPEC members like Russia, the world’s largest producer, but there is disagreement within the producer cartel as to which member states should cut and by how much.
Despite extensive diplomacy since September, the OPEC side of the deal still faces setbacks from Iraq’s call for it to be exempt and from Iran, which wants to increase supply because its output has been hit by sanctions.
Reports that Saudi Aramco would in January increase oil supplies to some Asian customers also weighed on markets, traders said.
Saudi’s late push for more exports to Asia comes as Russia has stolen its place as top supplier to China, the world’s biggest crude importer and growth market despite a monthly drop in imports in October. This is a strong indicator that Riyadh’s policy to let prices slide in order to defend market share has not had the desired effect.
A decline in China’s October crude oil imports to their lowest on a daily basis since January added to the bearish tone.
Analysts said fundamentals were little changed — apart from concerns over the fate next week of the Saudi-led plan for the OPEC and other producers to agree on cuts in crude output. That deal would only impact supplies from February 2017 because most exporters sell their supplies two months ahead.
The market “is taking it easy ahead of a long weeken
Oil prices dropped on Friday as much as 4 percent, dragged down by uncertainty over whether the Organisation of the Petroleum Exporting Countries (OPEC) will reach an output deal.
Futures extended early losses after Saudi Arabia said it will not attend talks on Monday with non-OPEC producers to discuss supply cuts.
Brent crude oil futures were trading at $47.02, down $1.98, or 4 percent, by 1:35 p.m. ET (1835 GMT). U.S. West Texas Intermediate (WTI) crude futures settled down $1.90, or 4 percent, at $46.06 per barrel.
Overall activity was thin after the U.S. Thanksgiving holiday and ahead of the weekend.
Top OPEC oil exporter Saudi Arabia has told the producer group it will not attend talks on Monday with non-OPEC producers to discuss limiting supply, OPEC sources said, as it wants to focus on having consensus within the organization first.
“I think Saudi’s announcement it would not to go to the meeting drove the initial sell-off,” said Tariq Zahir, managing member at Tyche Capital in New York. “There has to be a substantial cut and it has to be something that the street will believe.”
OPEC is due to meet on Nov. 30 to coordinate a cut, potentially with non-OPEC members like Russia, the world’s largest producer, but there is disagreement within the producer cartel as to which member states should cut and by how much.
Despite extensive diplomacy since September, the OPEC side of the deal still faces setbacks from Iraq’s call for it to be exempt and from Iran, which wants to increase supply because its output has been hit by sanctions.
Reports that Saudi Aramco would in January increase oil supplies to some Asian customers also weighed on markets, traders said.
Saudi’s late push for more exports to Asia comes as Russia has stolen its place as top supplier to China, the world’s biggest crude importer and growth market despite a monthly drop in imports in October. This is a strong indicator that Riyadh’s policy to let prices slide in order to defend market share has not had the desired effect.
A decline in China’s October crude oil imports to their lowest on a daily basis since January added to the bearish tone.
Analysts said fundamentals were little changed — apart from concerns over the fate next week of the Saudi-led plan for the OPEC and other producers to agree on cuts in crude output. That deal would only impact supplies from February 2017 because most exporters sell their supplies two months ahead.
The market “is taking it easy ahead of a long weekend (in the United States) and uncertainty over OPEC,” said Bjarne Schieldrop, chief commodities analyst with SEB Bank in Oslo.
Schieldrop said prices could rebound if the Nov. 30 meeting succeeded in reaching a targeted production cap of 32.5 million to 33 million barrels per day (bpd), from the 33.64 million bpd the group pumped in October.
On Thursday, the oil minister of non-OPEC nation Azerbaijan said OPEC was also pushing oil producers outside the group to make big cuts in output.
Most analysts expect some form of cut, but it is uncertain whether that would be enough to prop up a market dogged by oversupply since 2014.
“Oil market reaction will hinge on the credibility of the proposed action,” U.S. investment bank Jefferies said, adding that recent output increases to record levels in many countries now required a deep cut to lift prices significantly.
“The surge in OPEC output since August has shifted the market back into oversupply and re-balancing will be deferred until the second half of 2017 without a cut of at least 700,000 barrels per day.”
Source: Reuters
d (in the United States) and uncertainty over OPEC,” said Bjarne Schieldrop, chief commodities analyst with SEB Bank in Oslo.
Schieldrop said prices could rebound if the Nov. 30 meeting succeeded in reaching a targeted production cap of 32.5 million to 33 million barrels per day (bpd), from the 33.64 million bpd the group pumped in October.
On Thursday, the oil minister of non-OPEC nation Azerbaijan said OPEC was also pushing oil producers outside the group to make big cuts in output.
Most analysts expect some form of cut, but it is uncertain whether that would be enough to prop up a market dogged by oversupply since 2014.
“Oil market reaction will hinge on the credibility of the proposed action,” U.S. investment bank Jefferies said, adding that recent output increases to record levels in many countries now required a deep cut to lift prices significantly.
“The surge in OPEC output since August has shifted the market back into oversupply and re-balancing will be deferred until the second half of 2017 without a cut of at least 700,000 barrels per day.”
Source: Reuters
