Oil halts slide on doubts over Opec plans to cut output
SINGAPORE: Oil halted a slide near US$54 a barrel as investors weighed industry data that showed US crude inventories unexpectedly fell last week against doubts over the Organisation of Petroleum Exporting Countries’ (Opec) plans to cut output.
Futures in New York rose as much as 1.7%, after plunging more than 6% on Tuesday. The American Petroleum Institute was said to report a 1.55-million-barrel drop in stockpiles last week, compared with a gain forecast in a Bloomberg survey before official data. Meanwhile, US President Donald Trump said Saudi Arabia has been “very responsive” to his requests to keep prices low, calling into question Opec’s resolve to trim supply.
Crude prices in London and New York collapsed along with equities on Tuesday amid the highest volatility since 2016. Investors fled risky assets including oil as they fretted about America’s confrontations with China over trade. With Opec and its allies scheduled to meet in Vienna early December to discuss output plans, the International Energy Agency warned that cutting supplies may have some negative implications.
“Some investors are coming back into the market after the massive plunge,” Sungchil Will Yun, Seoul-based commodity analyst at HI Investment & Futures, said by phone.
West Texas Intermediate for January delivery rose as much as 92 US cents to US$54.35 a barrel on the New York Mercantile Exchange, and was 88 US cents higher at US$54.31 at 12.56pm in Singapore. The contract sank 6.6% to US$53.43 on Tuesday. Total volume traded was 49% above the 100-day average.
Brent for January settlement gained 1.6% to US$63.53 a barrel on the London-based ICE Futures Europe exchange. The contract settled 6.4% lower at US$62.53, the lowest close since December. The global benchmark crude traded at a US$9.22 premium to WTI for the same month.
Trump said he won’t let the murder of US-based journalist Jamal Khashoggi jeopardise relations with the Saudis as oil prices may “go through the roof” if the relationship between the two nations breaks. The kingdom had previously sought curbs of about 1 million barrels a day, while Russia signalled the need for a “balanced decision.” — Bloomberg