(Bloomberg) -- Oil weakened after OPEC was said to agree to extend output cuts for another nine months, disappointing investors who had hoped for more.
Futures dropped as much as 2.5 percent in New York. OPEC has agreed to prolong its supply deal for another nine months beyond June, said two delegates familiar with the matter, who asked not to be identified because the meeting hasn’t yet concluded. The group has submitted its extension proposal to its non-member partners before talks on their continuing participation take place later Thursday, according to one delegate.
The curbs are working, and prolonging the deal through March will “do the trick,” Saudi Oil Minister Khalid Al-Falih said before the ministerial meeting in Vienna Thursday. The Organization of Petroleum Exporting Countries will empower its monitoring committee to recommend “further interventions” if needed, Al-Falih said. Libya and Nigeria, which have boosted output since the curbs started in January, will continue to be exempt from production cuts, he said.
"It’s all gone as expected," Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. "This is a rollover of existing cuts with no changes, so it makes sense to stick to your positions."
West Texas Intermediate for July delivery fell 22 cents, or 0.4 percent, to $51.14 a barrel at 9:58 a.m. on the New York Mercantile Exchange. Total volume traded was more than double the 100-day average.
Brent for July settlement slipped 17 cents to $53.79 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $2.65 premium to WTI.
"They’re still staring down infrastructure build-out in some member countries and rising output here in the U.S.," John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy, said by telephone.
- OPEC ministers aren’t considering adding an option of an extra three months of supply reductions, said a delegate familiar with the matter, who asked not to be identified because the meeting is private.
- U.S. crude stockpiles dropped for a seventh week, by 4.43 million barrels, according to data from the Energy Information Administration Wednesday. They were forecast to fall by 2 million barrels in a Bloomberg survey.
- American crude output increased by 15,000 barrels a day to 9.32 million a day, the EIA said.