January 23, 2018

Main » Oil prices fall over 1% on pre-OPEC decision volatility

Oil prices fall over 1% on pre-OPEC decision volatility

01 December 2017

Oil prices slipped in Asian trade yesterday amid uncertainty over a possible extension of output cuts by major crude producers and expectations of higher supply as the Keystone pipeline restarts.

Crude futures bounced around on the news, but as of 10:56 a.m. EST (1556 GMT), oil prices were marginally higher, with US crude at $58.22 a barrel, up 23 cents on the day. U.S.'s West Intermediate Texas (WTI) crude futures fell 1.64% in the session, or 95 cents, to $57.04/Bbl.

Answering the question whether Iraq itself supports the extension of the Vienna agreement, the minister replied: "Yes, of course".

"Consensus expectations for the OPEC meeting this week have moved to neutral/negative, with fears that Russian Federation may block a unified OPEC/non-OPEC cut extension through full year 2018", said analysts led by Sam Margolin at Cowen, in a note.

Iraqi Oil Minister Jabbar al-Luaibi expects the oil-producing countries participating in the OPEC + agreement will decide to extend it.

Meanwhile, U.S. production continues to hit records on a weekly basis, rising to 9.68 million barrels per day (MMBPD) for the week ended November 24.

The net long position held by hedge funds and other money managers in the five main petroleum futures and options contracts covering crude and fuels were cut to 1,092 million barrels from a record 1,120 million on November 14.

OPEC members chose to cut production by 1.2 million barrels per day. "So, bottom line, rising USA oil production is a lose-lose for oil prices".

Gasoline stockpiles were up 3.6 million barrels for the week, while distillate stockpiles added 2.7 million barrels, according to the EIA.

Distillate inventories also saw a build this week, up 2.696 million barrels, against a forecast of a 230,000-barrel build.

On Nymex, December gasoline fell by 2.3% to $1.731 a gallon. Refinery utilization rates rose by 1.3 percentage points.

Oil prices fall over 1% on pre-OPEC decision volatility