Oil dips as U.S. supply threatens to undermine OPEC cuts
Reuters
Published Nov 16, 2017 10:20AM ET
Oil dips as U.S. supply threatens to undermine OPEC cuts
By Polina Ivanova
LONDON (Reuters) - Oil prices dipped on Thursday as rising U.S. production and inventories threatened to undermine a rally inspired in recent months by OPEC's curbs on output, despite expectations that these will be extended at the group's meeting on Nov. 30.
Brent crude futures (LCOc1) were down 46 cents a barrel at $61.41 by 1451 GMT. U.S. light crude (CLc1) fell 36 cents to $54.97.
Oil prices have slipped in recent days from the two-year highs hit last week by both crude benchmarks after signs that U.S. supply is rising fast and could potentially undermine OPEC's efforts to tighten the market.
"The oil market sell-off is easing, but the bearish afterglow from yesterday's update on U.S. oil stockpiles is keeping bears in the driving seat," PVM wrote in a note to clients, referring to new data from the U.S. Energy Information Administration on Wednesday.
"Selling pressures are being underpinned by an unexpected jump in U.S. crude and gasoline inventories," PVM added.
The EIA data showed domestic crude inventories
Analysts in a Reuters poll had expected a decrease of 2.2 million barrels.
U.S. crude oil production
But expectations that a meeting of the Organization of the Petroleum Exporting Countries in Vienna on Nov. 30 would result in OPEC nations and other big exporters extending their pact to tighten supply has offset some of the pressure on prices.
OPEC and non-OPEC exporters including Russia agreed a year ago to cut crude output by 1.8 million barrels per day (bpd) between January this year and March 2018 to bolster prices.
Oil ministers have signaled that they are likely to extend the agreement, possibly until the end of next year.
"It is widely believed that OPEC and non-OPEC nations will roll over their production until (end) 2018," said PVM Oil Associates analyst Tamas Varga.
"If they don't, or if the period will be shorter than nine months, I think we will see even lower prices. Brent would break back below $60 a barrel."
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Written By: Reuters
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