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Oil prices retrace losses but doubts remain over OPEC output deal

CommoditiesNov 28, 2016 05:45AM ET
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© Reuters. Oil prices fluctuate amid OPEC deal doubts - Oil prices retraced losses on Monday, after sharp falls overnight on the back of mounting concerns that Wednesday’s crunch OPEC meeting will not yield an agreement on output cuts.

U.S. crude oil was down 8 cents or 0.22% at $45.97 a barrel at 1044GMT, after falling as low as $45.26 earlier.

Global benchmark Brent futures were at $48.16 a barrel, off 8 cents or 0.19%.

Oil prices fell sharply during the Asian session as doubts remained over a planned output cut by the Organization of the Petroleum Exporting Countries.

The producer cartel is attempting to get its 14 member states, along with non-OPEC member Russia, to implement coordinated production cuts aimed at reducing a global supply glut that has seen oil prices halve in two years.

In September OPEC reached an agreement that would reduce production to between 32.5 million and 33 million barrels per day.

OPEC is to hold a meeting in Vienna on Wednesday, where the deal was expected to be finalized.

But reaching an agreement on a deal to cut output has proved problematic, with some producers reluctant to curb production.

Over the weekend Saudi Arabia’s oil minister Khalid al-Falih said supply curbs may not be needed, saying prices will stabilize in 2017 without an intervention from OPEC.

The remarks were seen as an indication that an agreement on OPEC’s first production cut in eight years may not be reached in Vienna.

Oil ministers from Algeria and Venezuela were to travel to Moscow on Monday, ahead of Wednesday’s key meeting, in a bid to persuade Russia to take part in cuts rather than merely freezing output.

Most analysts believe that some form of consensus will be reached, but doubts remain over whether it will be enough to support the market.

"An agreement to a large production cut could send oil prices closer to $60 per barrel before year's end, while failure to reach an agreement could cause oil prices to fall back to the low $40 per barrel," analysts at Nordea said.

Oil prices retrace losses but doubts remain over OPEC output deal

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Comments (1)
Shah Ramzi
Shah Ramzi Nov 28, 2016 3:53PM ET
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what the effect on oil market after OPEC?
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