Oil falls be­low $70 a bar­rel as un­rest con­tin­ues

OPEC con­sid­ers oil pro­duc­tion cuts in yet an­other U-turn, writes Alex Lon­g­ley

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE -

OIL ex­tended a run of de­clines af­ter fall­ing into a bear mar­ket, head­ing for its long­est los­ing streak on record. Fu­tures in New York fell for a 10th day, ex­tend­ing a dra­matic plunge that’s dragged prices down more than 20pc from a four-year high reached in early Oc­to­ber. In Lon­don, Brent sank to a seven-month low be­low $70 a bar­rel.

The drop comes days be­fore the Or­ga­ni­za­tion of Pe­tro­leum Ex­port­ing Coun­tries meets with part­ners in Abu Dhabi, hav­ing sig­nalled it may cut out­put next year. Oil’s de­cline has been ex­ac­er­bated by a US de­ci­sion to al­low eight coun­tries to con­tinue im­port­ing from Iran, which it slapped with sanc­tions ear­lier this week.

That de­ci­sion, as well as pledges by Saudi Ara­bia and other pro­duc­ers to pump more and gains in Amer­i­can sup­ply and stock­piles, have turned fears of a sup­ply crunch into talk of an over­sup­ply.

“The fo­cus is on neg­a­tive sen­ti­ment in oil and neg­a­tive mo­men­tum,” said Gio­vanni Staunovo, a com­mod­ity an­a­lyst at UBS Group AG. “It’ll be in­ter­est­ing to see if some stick with their shorts over the week­end with the Opec meet­ing.” West Texas In­ter­me­di­ate for De­cem­ber de­liv­ery dropped $1.07 to $59.60 a bar­rel on the New York Mer­can­tile Ex­change at one stage in New York. The con­tract fell 1.6pc on Thurs­day, and is headed for a 5.6pc de­cline on the week — its fifth con­sec­u­tive such de­crease. To­tal vol­ume traded was 81pc above the 100-day av­er­age. Brent fu­tures for Jan­uary set­tle­ment slid 93 cents to $69.72 a bar­rel on the Lon­don-based ICE Fu­tures Eu­rope ex­change. Prices are also on course for a fifth weekly drop, down 4.2pc. The global bench­mark crude traded at a $9.87 premium to WTI for the same month.

A po­ten­tial agree­ment by Opec to re­turn to out­put cuts would mark the sec­ond pro­duc­tion U-turn for the group this year. For Saudi Ara­bia — the world’s big­gest crude ex­porter — it would be the third time in re­cent years that the king­dom has de­liv­ered a sup­ply surge only to quickly re­verse it.

In the US, crude pro­duc­tion in­creased to a record 11.6 mil­lion bar­rels a day last week, ac­cord­ing to En­ergy In­for­ma­tion Ad­min­is­tra­tion data. Na­tion­wide stock­piles rose by 5.8 mil­lion bar­rels, ex­ceed­ing the two-mil­lion-bar­rel gain ex­pected in a Bloomberg sur­vey. Opec’s out­put in Oc­to­ber reached the high­est level since 2016, while Rus­sia last month pumped 11.4 mil­lion bar­rels a day, a post-soviet record. Bloomberg

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.