(Bloomberg) -- Oil closed lower for a third session, stuck near $55 a barrel as traders’ certainty over the fate of OPEC-led output cuts turned to doubt.
Futures fell 0.3 percent in New York. OPEC leaders haven’t yet convinced Russia that oil-production limits set to expire in March should be extended, people with knowledge of the matter said this week. Saudi Arabia’s energy minister, Khalid Al-Falih, said later on Thursday that OPEC and its allies should announce an extension when they meet this month, but prices were little changed in after-hours trading.
“The market will ultimately be dictated by these headlines the next two weeks,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone.
Oil had surged to a 28-month high last week as internal strife rocked Saudi Arabia and simmering conflicts threatened to boil over across the Middle East. Now, all eyes are on the end of this month, when the Organization of Petroleum Exporting Countries and allies such as Russia and Mexico will meet in Vienna to discuss the fate of self-imposed production caps intended to erase a worldwide oversupply of crude.
In the U.S., drillers boosted weekly crude output to the highest in more than three decades, fanning fears of a persistent global glut.
West Texas Intermediate for December delivery fell 19 cents to end the session at $55.14 a barrel on the New York Mercantile Exchange. The price has fallen 2.8 percent so far this week.
Brent for January settlement slid 51 cents to $61.36 on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of $6.01 to the January WTI contract.
Russian oil bosses meeting with Energy Minister Alexander Novak on Wednesday had differing opinions about the need or duration for any extension of the cuts, said a government official who asked not to be named because they’re not authorized to speak to the press. Those discussions will resume next week.
“There’s now just a 50-50 chance of an announcement coming after this meeting, and I wouldn’t have said that even a week ago,” said Michael Poulsen, an analyst at Global Risk Management Ltd. “It is suddenly a very mixed picture.”
U.S. crude stockpiles rose by 1.85 million barrels last week, according to a report from the Energy Information Administration. That was in contrast to a Bloomberg survey which forecast a decline. Inventories at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, fell by 1.5 million barrels.
- OPEC-led cuts should be extended to help re-balance the market, according to Suhail Al Mazrouei, energy minister of the United Arab Emirates, the fourth-biggest producer of the group.
- TransCanada shut its Keystone oil pipeline after a spill in South Dakota.
- Norway’s $1 trillion sovereign wealth fund proposed dumping about $35 billion in oil and gas stocks, including Royal Dutch Shell Plc and Exxon Mobil Corp., to protect the economy of western Europe’s biggest petroleum producer.
- Russia will be able to quickly restart 95 percent of the oil production it idled under the OPEC-led deal once the agreement expires, Citigroup analyst Ed Morse said in a note.
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