Oil slips on OPEC deal uncertainty and rising U.S.
Send a link to a friend
[November 29, 2017]
By Polina Ivanova
LONDON (Reuters) - Oil prices slipped on
Wednesday as doubts set in about Russia's willingness to substantially
extend a deal among some of the world's biggest exporters to curb output
to help tackle global oversupply and support prices.
Brent crude futures were down 22 cents on the day at $63.39 a barrel by
1147 GMT, while U.S. light crude fell 25 cents to $57.74 a barrel.
Oil ministers from the Organization of the Petroleum Exporting Countries
and other producers began gathering in Vienna on Wednesday to discuss
extending a deal that has so far reduced crude oil production by 1.8
million barrels per day (bpd) and helped boost oil prices by 40 percent
since the middle of the year.
The deal between most OPEC members and other major exporters including
Russia is scheduled to expire in March 2018.
Producers at a meeting on Thursday are expected to agree to extend the
agreement, but the length of the extension remains an open question.
This has kept the market on its toes.
"Tomorrow's long-awaited meeting was meant to be a formality," said
Stephen Brennock, analyst at broker PVM. "This narrative has, however,
not gone according to the script and the scene is set for
tougher-than-expected policy talks."
OPEC sources said on Tuesday that though the Vienna meeting would see
supply cuts extended to the end of 2018, an option to review the deal in
June would be included.
[to top of second column]
A oil pump is seen at sunset outside Scheibenhard, near Strasbourg,
France, October 6, 2017 . REUTERS/Christian Hartmann
Reluctance to a robust extension has been driven mainly by Russia and its
concerns that a major extension could lead the market to overheat.
Moscow fears that a strong price rally off the back of such a move could give an
unsustainable boost to the rouble, one that harms Russian exports.
It could also trigger an increase in U.S. production, which has already been
rising significantly and offsetting the OPEC-led cuts to some extent.
A report from the American Petroleum Institute (API) on Tuesday showed a weekly
rise in U.S. crude inventories of 1.8 million barrels, confounding expectations
for a 2.3 million barrel drop.
"The market had been looking forward to a supportive number due to the pipeline
disruption from Canada," said Ole Hansen, senior manager at Saxo Bank. "But
nevertheless the overall level of inventory still managed to climb."
A price rise generated by the shutdown of the Keystone pipeline, which supplies
Canadian crude to the United States, turned out to be short-lived, with an
announcement on Tuesday of a gradual restart to operations.
(Reporting by Henning Gloystein and Polina Ivanova; editing by Louise Heavens
and Jason Neely)
[© 2017 Thomson Reuters. All rights
Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.