Oil holds near US$57 as investors weigh Opec plans and IEA warning

SINGAPORE: Oil traded near US$57 a barrel as traders assessed Opec’s plans to cut production, while its key ally Russia and a top energy adviser warned suppliers against making a hasty decision on cutbacks.

Front-month futures were little changed in New York after rising 0.9% on Monday. The Organisation of Petroleum Exporting Countries and its partners need to watch the market in the coming weeks before making any decisions to trim output, said Russian Energy Minister Alexander Novak. International Energy Agency (IEA) executive director Fatih Birol also warned that reducing supplies may have some negative implications.

Crude markers in New York and London have both fallen more than 20% from their October highs on concerns over oversupply after the US granted waivers to some countries to buy Iranian oil despite sanctions. While trade tensions between China and the US cripple the outlook for oil demand, Saudi Arabia’s oil policies aim to preserve market stability, the nation’s king said during his first major public address since the killing of prominent journalist Jamal Khashoggi.

“Opec and its key allies have proven they have much influence over prices,” said Stephen Innes, Singapore-based head of trading for Asia Pacific at Oanda Corp.

“Oil market had a lot of noise thrown at it overnight, IEA notwithstanding, but still bounced back, suggesting details of Dec 6 meeting should provide a stable platform for prices over the near term.”

West Texas Intermediate for January delivery traded at US$57.06 a barrel on the New York Mercantile Exchange, down 14 cents, at 11:03 am in Singapore.

The December contract, which expired on Monday, gained 0.5% to US$56.76. Total volume traded was about 33% below the 100-day average

Brent for January settlement dropped 24 cents to US$66.55 a barrel on the London-based ICE Futures Europe exchange.

The contract closed 3 cents higher at US$66.79 on Monday. The global benchmark crude traded at a US$9.48 premium to WTI for the same month.