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Oil traded near $57 a barrel as traders assessed OPEC’s plans to cut production, while its key ally Russia and a top energy adviser warned suppliers against making a hasty decision on cutbacks.
Front-month futures were little changed in New York after rising 0.9 percent on Monday. OPEC and its partners need to watch the market in the coming weeks before making any decisions to trim output, said Russian Energy Minister Alexander Novak. International Energy Agency Executive Director Fatih Birol also warned that reducing supplies may have some negative implications as the producer group will meet in Vienna early December to discuss supply curbs.
Crude markers in New York and London have both fallen more than 20 percent from their October highs on concerns over a supply glut after the U.S. granted waivers to some countries to buy Iranian oil despite sanctions. While trade tensions between China and America cripple the outlook for oil demand, Saudi Arabia’s oil policies aim to preserve market stability, the nation’s king said during his first major public address since the killing of prominent journalist Jamal Khashoggi.
“The Organization of Petroleum Exporting Countries and its key allies have proven they have much influence over prices,” said Stephen Innes, Singapore-based head of trading for Asia Pacific at Oanda Corp. “Oil market had a lot of noise thrown at it overnight, IEA notwithstanding, but still bounced back, suggesting details of Dec. 6 meeting should provide a stable platform for prices over the near term.”
West Texas Intermediate for January delivery traded at $57.11 a barrel on the New York Mercantile Exchange, down 9 cents, at 7:29 a.m. in London. The December contract, which expired on Monday, gained 0.5 percent to $56.76. Total volume traded was slightly below the 100-day average
Brent for January settlement dropped 43 cents to $66.36 a barrel on the London-based ICE Futures Europe exchange. The contract closed 3 cents higher at $66.79 on Monday. The global benchmark crude traded at a $9.42 premium to WTI for the same month.
Russia’s wait-and-see stance to not immediately join Saudi counterpart Khalid Al-Falih in calling for a broad production cut shows their different positions persist just weeks before the key OPEC+ summit in the Austrian capital. While Russia pointed out the need for a “balanced decision,” the kingdom had sought for curbs of about 1 million barrels a day.
IEA’s Birol also continued to warn OPEC and its partners against the impact of resuming supply cuts. He said the market needs to note that “spare capacity in Saudi Arabia is very thin, therefore cutting the production significantly today by key oil producers may have some negative implications for the market.”
–With assistance from Tsuyoshi Inajima.To contact the reporter on this story: Sharon Cho in Singapore at email@example.com To contact the editors responsible for this story: Pratish Narayanan at firstname.lastname@example.org Heesu Lee, Sungwoo Park