Oil slips as focus moves from Trump to OPEC plans
By Ethan Lou
NEW YORK (Reuters) – Oil prices slipped on Thursday as markets recovered from shock at U.S. President-elect Donald Trump’s surprise victory and focused on global oversupply as well whether OPEC will decide to cut production later this month.
Most markets shook off post-election losses and bounced back on Thursday, but oil still faces a glut that has kept prices under pressure for much of the past two years.
The Organization of the Petroleum Exporting Countries (OPEC) meets in Vienna on Nov. 30 for talks on output cuts. It has sought cooperation from non-members, including Russia, but doubts remain over whether they can come to an agreement.
Prices were down even as stockpiles at the U.S. delivery hub for crude futures in Cushing, Oklahoma, dropped by 663,916 barrels for the week, according to traders, citing energy monitoring service Genscape.
Brent crude fell 26 cents at $46.10 a barrel by 10:36 a.m. (1036 GMT). U.S. West Texas Intermediate crude was down 37 cents at $44.90.
“If no agreement is reached and some individual members continue to expand their production, then the market will remain in surplus throughout the year, with little prospect of oil prices rising significantly,” the International Energy Agency (IEA) said in its monthly report on Thursday.
“If the supply surplus persists in 2017, there must be some risk of prices falling back,” the IEA added.
But prices will likely rebound, at least temporarily, in the coming days and may even go above $50 a barrel as traders cling to the hope of an OPEC deal, said Fawad Razaqzada, analyst at Forex.com.
“Although there is so much doubt about the prospects of a production cut or freeze deal between the OPEC and Russia, an agreement is still possible,” he said.
Russian Energy Minister Alexander Novak said on Thursday he saw higher chances of reaching a deal than before, and that global crude oil output could be frozen at November levels if an agreement is reached on Nov. 30.
The market was dampened by a 2.4-million-barrel rise in U.S. crude inventories to 485 million barrels last week, reported by the Energy Information Administration on Wednesday.
Investors are also still assessing the impact of a Trump presidency, which Goldman Sachs said is likely to result in higher investment and, in time, increased U.S. oil output as the president-elect has said he intends to deregulate fossil fuel production.
(Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Bernadette Baum)