Oil Prices Waver, Rise in Turbulent and Complex Market
Nov 07 2016
Oil prices initially jumped higher on the news that day (http://www.marketwatch.com/story/oil-prices-steady-as-markets-ignore-us-supply-data-focus-on-opec-2016-10-27), but pared gains as "OPEC's ability to move prices on rhetoric alone begins to wear thin", said Fraser.
The major objective of producers' meeting would be to discuss the production cut announced for all of its members in the previous meeting in Algeria.
The uncertainty over what OPEC will do to fix the current state of the energy market raises questions over what the outcome of the November talks will be.
Brent crude futures were down 69 cents, or 1.4 percent, at $49.78 a barrel by 2:44 p.m. ET (1844 GMT), on pace for a weekly decline of almost 4 percent.
West Texas Intermediate for December delivery slipped 48 cents, or 1 percent, to $49.24 a barrel at 9:38 a.m. on the New York Mercantile Exchange.
A note from the research department of Commerzbank earlier this month said it would be surprised if the Russians agreed to cut their oil production, mainly because numerous key companies are privately owned.
These market gyrations come at the same time as members of the OPEC cartel say they have worked out a deal to cut oil production to boost prices. Another meeting will be held tomorrow with non-OPEC producers, including Russian Federation.
"Investors remain uncertain as to whether OPEC can implement the tentative agreement to cut production", ANZ bank said on Thursday.
And Iraq told a top OPEC official on Tuesday of its hope for a deal that would lift oil prices while preserving its own output level, an oil ministry spokesman said.
Part of the reason for reluctance to cut output is attributed to worries about growing production in the U.S. Oil services company Baker Hughes, which issues the data, has reported steady rig rates or additions for 17 weeks.
Nigeria, Iran and Libya are exempt from the proposed output cuts. For one thing, shale oil production has permanently added to supply at lower prices.
The cartel earlier sent invitation for participation in the technical meeting to 12 non-cartel states, including Russia, Azerbaijan, Kazakhstan, Oman, Egypt, Bahrain, Colombia, Mexico, Trinidad and Tobago, Bolivia, Norway and Canada.
Futures fell 2.1 percent on Friday.
The American Petroleum Institute (API) reported that U.S. crude stocks rose by 4.8 MMbbl in the week ended October 21 vs. a 1.7 MMbbl build forecast by analysts polled by Reuters. The contract was set to close the week more than 3 percent lower, in its steepest weekly loss since mid-September. In a worst case, where Iran, Iraq and Venezuela produce more than they did last month, that rises to over 2 million barrels a day, based on Bloomberg calculations.