Oil prices slide, OPEC action expectation limits losses

18/10/2016 04:43 AST

Oil prices fell on Monday, weighed by oversupply concerns, while expectations of an OPEC intervention next month to curb production limited losses. International benchmark Brent crude oil futures fell 57 cents to $51.38 per barrel at 1348 GMT, after hitting a session high of $52.29 a barrel.

US West Texas Intermediate (WTI) crude oil futures were trading at $49.65 per barrel, down 70 cents from their last settlement, after hitting a session high of $50.58. Analysts said that while the market was supported by expectations that members of the Organization of the Petroleum Exporting Countries (OPEC) would take action to support prices late next month, oversupply continued to weigh.

“It’s very hard for the Brent crude price to sell below the $50 a barrel mark ahead of the November 30 meeting,” said Bjarne Schieldrop, chief commodities analyst at SEB. He said that OPEC kingpin Saudi Arabia sent a very clear statement about working to curb production and support higher prices, but added that an oversupplied physical crude market was capping further gains in prices.

OPEC agreed in September to cut supply to between 32.50 million and 33.0 million barrels per day, and expects to finalize the details of the deal at its meeting in Vienna on Nov. 30. “Record supply from OPEC year-to-date, weaker global GDP estimates, and still elevated inventories cause us to lower and flatten our oil price outlook,” Bernstein Energy said in a note.

OPEC pumped a record 33.6 million barrels of crude oil per day in September, with some members signalling they plan further increases.

Among other OPEC members, Nigeria expects its crude output to rise 22 percent to 2.2 million bpd by the end of December, oil minister Emmanuel Ibe Kachikwu said. And Libya’s output has been steadily rising, hitting 551,000 bpd last week.

Traders said that WTI was under pressure from a report on Friday by oil services provider Baker Hughes which showed US drillers added four rigs in the week to Oct. 14. It was the 16th week in a row that oil drillers had gone without making cuts, indicating more production to come.

A firmer dollar also weighed on prices, as an expected hike in US interest rates later this year drove the US currency to a seven-month high against a basket of currencies .

Dollar-traded oil becomes more expensive for holders of other currencies when the greenback strengthens, potentially limiting demand.

Arab News