Oil Trades Near 3-Week Low as OPEC Deal Faces ‘Stumbling Blocks’
Oil traded near a three-week low below $50 a barrel as traders remained skeptical that OPEC will manage to curtail production following its surprise deal in Algiers last month.
Futures rose 0.3 percent in New York after falling 1.6 percent Wednesday. OPEC Secretary-General Mohammed Barkindo urged members to show “maximum flexibility” to agree on output cuts, after saying Tuesday the group is facing its “hardest” challenge. In the U.S., Gulf and East Coast crude supplies increased.
Oil has fluctuated near $50 a barrel amid uncertainty about whether the Organization of Petroleum Exporting Countries can implement its first output cuts in eight years at an official gathering in November. An OPEC committee will meet this week to try to resolve differences over how much individual members should pump, after Iraq joined the list of countries seeking an exemption from caps.
“We remain of the opinion that any agreement at the upcoming OPEC meeting is unlikely to have a material impact on the market,” said Carsten Menke, a commodities research analyst at Julius Baer Group Ltd. “Many stumbling blocks remain, with the newest one being this week’s comments from Iraq that it should be exempt from an agreement.”
West Texas Intermediate for December delivery was at $49.34 a barrel on the New York Mercantile Exchange, up 16 cents, at 10:15 a.m. London time. The contract slid 78 cents to $49.18 on Wednesday, the lowest close since Oct. 4. Total volume traded Thursday was about 13 percent below the 100-day average.
Brent for December settlement was at $50.27 a barrel, up 29 cents, on the London-based ICE Futures Europe exchange, trading at a 93-cent premium to WTI. The global benchmark crude slipped 81 cents to $49.98 on Wednesday, the lowest close since Sept. 30.
Speaking from Iraq, OPEC’s Barkindo said he would work with members to overcome the “challenges and uncertainties” of the market and urged them to be accommodating to achieve an agreement. Meanwhile, Algeria’s Energy Minister Noureddine Boutarfa said there’s “no turning back” on the Algiers deal and that the group’s Nov. 30 summit will fix quotas.
In the U.S., Gulf Coast crude stockpiles increased by 2 million barrels last week, while East Coast supplies also expanded, according to a report from the Energy Information Administration on Wednesday. While West Coast inventories declined, pushing down the nationwide total, that region’s distribution system is isolated from the rest of the country.
- The oil market will rebalance in the second half of 2017 without OPEC intervention, Fatih Birol, executive director of the International Energy Agency, said in Mexico City.
- Kazakhstan’s Kashagan field is seen producing 4 million to 7 million tons of oil next year, Interfax reported, citing the country’s energy minister.