You are here: Home » Reuters » News
Business Standard

Oil tumbles nearly 4 percent on doubts over OPEC production cut

Reuters  |  NEW YORK 

By Scott DiSavino

NEW YORK (Reuters) - prices fell almost 4 percent on Tuesday on signs leading exporters in OPEC were struggling to agree on a deal to cut production to reduce oversupply.

Brent futures were down $1.80, or 3.7 percent, at $46.44 a barrel by 10:51 a.m. EST (1551 GMT). U.S. crude fell $1.79, or 3.8 percent, to $45.29 per barrel. That was the biggest daily percentage decline for Brent since early September.

The Organization of the Petroleum Exporting Countries will meet in Vienna on Wednesday aiming to implement a deal outlined in September to cut output by around 1 million barrels per day (bpd), from around 33.82 million bpd in October.

But Iran and Iraq were resisting pressure from Saudi Arabia to curtail production, making it hard for OPEC to reach an agreement. That has led some analysts to suggest the meeting may fail to reach a deal or produce one that is unworkable.

"The inability to arrive at a framework for a reasonable agreement after 2-1/2 months of Saudi driven discussions strongly suggests any formal communique to restrain output will be a watered down version," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.

Ritterbusch, however, said he believes OPEC had a better than 50 percent chance of reaching an agreement, which should offer some near-term price relief. He noted the burden of actual curtailments would likely fall on the Persian Gulf producers, especially the Saudis.

Non-OPEC producer Russia confirmed on Tuesday it would not attend the OPEC gathering, but added that a later meeting was possible.

Intense negotiations would be needed on Wednesday to cement a deal, Goldman Sachs analysts said.

Indonesian Energy Minister Ignasius Jonan said he was not sure OPEC would clinch a deal to limit output when it met.

"I don't know. The feeling today is mixed," he told reporters when asked about the prospects of a deal.

If OPEC agreed to cut production to 32.50 million bpd, crude prices would likely rise to the low $50s a barrel, Goldman said.

"If no deal is reached, our expectation of rising (crude) inventories through the first half of 2017 would warrant prices averaging $45 per barrel through next summer," Goldman said.

In Asia, OPEC's biggest customer region, importers made clear they would not be happy with an artificial supply cut that hikes prices, and that in case of a cut they would seek more supplies from outside OPEC.

In the United States, analysts polled by Reuters ahead of weekly inventory reports from the American Petroleum Institute (API) industry group later on Tuesday and the U.S. Energy Information Administration (EIA) on Wednesday estimated, on average, that crude stocks increased about 900,000 barrels in the week to Nov. 25.

(Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Marguerita Choy and Jason Neely)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

RECOMMENDED FOR YOU

Oil tumbles nearly 4 percent on doubts over OPEC production cut

NEW YORK (Reuters) - Oil prices fell almost 4 percent on Tuesday on signs leading oil exporters in OPEC were struggling to agree on a deal to cut production to reduce global oversupply.

By Scott DiSavino

NEW YORK (Reuters) - prices fell almost 4 percent on Tuesday on signs leading exporters in OPEC were struggling to agree on a deal to cut production to reduce oversupply.

Brent futures were down $1.80, or 3.7 percent, at $46.44 a barrel by 10:51 a.m. EST (1551 GMT). U.S. crude fell $1.79, or 3.8 percent, to $45.29 per barrel. That was the biggest daily percentage decline for Brent since early September.

The Organization of the Petroleum Exporting Countries will meet in Vienna on Wednesday aiming to implement a deal outlined in September to cut output by around 1 million barrels per day (bpd), from around 33.82 million bpd in October.

But Iran and Iraq were resisting pressure from Saudi Arabia to curtail production, making it hard for OPEC to reach an agreement. That has led some analysts to suggest the meeting may fail to reach a deal or produce one that is unworkable.

"The inability to arrive at a framework for a reasonable agreement after 2-1/2 months of Saudi driven discussions strongly suggests any formal communique to restrain output will be a watered down version," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.

Ritterbusch, however, said he believes OPEC had a better than 50 percent chance of reaching an agreement, which should offer some near-term price relief. He noted the burden of actual curtailments would likely fall on the Persian Gulf producers, especially the Saudis.

Non-OPEC producer Russia confirmed on Tuesday it would not attend the OPEC gathering, but added that a later meeting was possible.

Intense negotiations would be needed on Wednesday to cement a deal, Goldman Sachs analysts said.

Indonesian Energy Minister Ignasius Jonan said he was not sure OPEC would clinch a deal to limit output when it met.

"I don't know. The feeling today is mixed," he told reporters when asked about the prospects of a deal.

If OPEC agreed to cut production to 32.50 million bpd, crude prices would likely rise to the low $50s a barrel, Goldman said.

"If no deal is reached, our expectation of rising (crude) inventories through the first half of 2017 would warrant prices averaging $45 per barrel through next summer," Goldman said.

In Asia, OPEC's biggest customer region, importers made clear they would not be happy with an artificial supply cut that hikes prices, and that in case of a cut they would seek more supplies from outside OPEC.

In the United States, analysts polled by Reuters ahead of weekly inventory reports from the American Petroleum Institute (API) industry group later on Tuesday and the U.S. Energy Information Administration (EIA) on Wednesday estimated, on average, that crude stocks increased about 900,000 barrels in the week to Nov. 25.

(Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Marguerita Choy and Jason Neely)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Oil tumbles nearly 4 percent on doubts over OPEC production cut

By Scott DiSavino

NEW YORK (Reuters) - prices fell almost 4 percent on Tuesday on signs leading exporters in OPEC were struggling to agree on a deal to cut production to reduce oversupply.

Brent futures were down $1.80, or 3.7 percent, at $46.44 a barrel by 10:51 a.m. EST (1551 GMT). U.S. crude fell $1.79, or 3.8 percent, to $45.29 per barrel. That was the biggest daily percentage decline for Brent since early September.

The Organization of the Petroleum Exporting Countries will meet in Vienna on Wednesday aiming to implement a deal outlined in September to cut output by around 1 million barrels per day (bpd), from around 33.82 million bpd in October.

But Iran and Iraq were resisting pressure from Saudi Arabia to curtail production, making it hard for OPEC to reach an agreement. That has led some analysts to suggest the meeting may fail to reach a deal or produce one that is unworkable.

"The inability to arrive at a framework for a reasonable agreement after 2-1/2 months of Saudi driven discussions strongly suggests any formal communique to restrain output will be a watered down version," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.

Ritterbusch, however, said he believes OPEC had a better than 50 percent chance of reaching an agreement, which should offer some near-term price relief. He noted the burden of actual curtailments would likely fall on the Persian Gulf producers, especially the Saudis.

Non-OPEC producer Russia confirmed on Tuesday it would not attend the OPEC gathering, but added that a later meeting was possible.

Intense negotiations would be needed on Wednesday to cement a deal, Goldman Sachs analysts said.

Indonesian Energy Minister Ignasius Jonan said he was not sure OPEC would clinch a deal to limit output when it met.

"I don't know. The feeling today is mixed," he told reporters when asked about the prospects of a deal.

If OPEC agreed to cut production to 32.50 million bpd, crude prices would likely rise to the low $50s a barrel, Goldman said.

"If no deal is reached, our expectation of rising (crude) inventories through the first half of 2017 would warrant prices averaging $45 per barrel through next summer," Goldman said.

In Asia, OPEC's biggest customer region, importers made clear they would not be happy with an artificial supply cut that hikes prices, and that in case of a cut they would seek more supplies from outside OPEC.

In the United States, analysts polled by Reuters ahead of weekly inventory reports from the American Petroleum Institute (API) industry group later on Tuesday and the U.S. Energy Information Administration (EIA) on Wednesday estimated, on average, that crude stocks increased about 900,000 barrels in the week to Nov. 25.

(Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Marguerita Choy and Jason Neely)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard