Oil falls on doubts over OPEC, pipeline restart
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[November 28, 2017]
By Christopher Johnson
LONDON (Reuters) - Oil prices fell on
Tuesday on uncertainty over the outcome of a key OPEC meeting this week
due to decide on production policy for the next year.
Brent crude oil <LCOc1> fell 58 cents on the day to $63.26 a barrel by
1240 GMT. U.S. light crude <CLc1> was 45 cents lower at $57.66, after
falling 1.4 percent in the last session.
Members of the Organization of the Petroleum Exporting Countries and
other key producers, including Russia, meet on Nov. 30 to discuss
whether to continue to limit production in an effort to drain global
inventories to help push up prices.
They cut production by 1.8 million barrels per day (bpd) in January and
agreed to hold down output until March. The market had expected OPEC to
extend the limits by another six to nine months, but this is now less
"We believe that the outcome of this meeting is much more uncertain than
usual," Goldman Sachs analysts said, suggesting that the oil market may
have been wrong to assume that OPEC would agree to restrict output until
the end of 2018.
"We view risks to oil prices as skewed to the downside this week as we
believe that current prices, time spreads and positioning already
reflect a high probability of a nine-month extension," the Goldman
Doubts have emerged over whether Russia will agree to join the OPEC in
an extension of production curbs beyond March.
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A pump jack is seen at sunrise near Bakersfield, California October
14, 2014. REUTERS/Lucy Nicholson/File Photo
Russia's economy was negatively affected in October by the ongoing curbs, which
saw Moscow agree to cut output by 300,000 bpd, Economy Minister Maxim Oreshkin
U.S. crude touched $59.05 a barrel on Friday, its highest since mid-2015, fueled
by the outage of the Keystone pipeline, one of Canada's main crude export routes
to the United States.
But TransCanada Corp this week said it would restart the 590,000 barrel-per-day
pipeline at reduced pressure on Tuesday after getting approval from U.S.
"This bearish development adds to the underlying unease surrounding the outcome
of Thursday’s OPEC meeting," PVM Oil Associates analysts said in a report.
Consultancy Wood Mackenzie said it looked as if producers had nearly concluded
an agreement to extend cuts until the end of next year.
"(But) if the production cut agreement ends in March 2018, our forecast shows
there would be a projected 2.4 million bpd year-on-year increase in world oil
supply for 2018," said Ann-Louise Hittle, vice president for macro oils.
(Additional reporting by Amanda Cooper in London and Keith Wallis in Singapore;
Editing by Louise Heavens)
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