Oil prices pare gains on weaker stocks, strong dol­lar

The Sun (Malaysia) - - SUNBIZ -

NEW YORK: Oil prices drifted yes­ter­day after Brent crude hit US$50 (RM207) a bar­rel and US crude reached three-month highs as traders weighed weaker stock mar­kets and a strong dol­lar against Opec’s first planned pro­duc­tion cut in eight years.

Brent rose 9 cents, or 0.2%, to US$50.28 a bar­rel by 1446 GMT, re­treat­ing from a six-week high of US$50.90.

US West Texas In­ter­me­di­ate crude was un­changed at US$48.24 a bar­rel. It ear­lier hit US$48.87, its high­est since July 5.

Europe and Asia’s largest mar­kets, Ger­many and China, were both shut for pub­lic hol­i­days yes­ter­day, lim­it­ing trade.

The Or­gan­i­sa­tion of the Petroleum Ex­port­ing Coun­tries said last week it would cut out­put to be­tween 32.5 mil­lion bar­rels per day (bpd) and 33.0 mil­lion bpd from about 33.5 mil­lion bpd, with de­tails to be fi­nalised at its pol­icy meet­ing in Novem­ber.

Brent crude oil prices, most sen­si­tive to any Opec deal, have climbed more than 8% since the planned cuts were an­nounced on Wed­nes­day de­spite scep­ti­cism over the ef­fec­tive­ness of the deal in erod­ing the global sur­plus.

An­a­lysts said there was down­side risk to oil prices if the planned cut was not deep enough to bring pro­duc­tion back in line with con­sump­tion.

“Opec has cre­ated its own Q4 risk to oil prices ... in rais­ing ex­pec­ta­tions of a Novem­ber deal to cut pro­duc­tion, it also risks a steep price de­cline should it fail to achieve its goal of cut­ting out­put back to less than 33 mil­lion bpd,” Bar­clays said in a note to clients. – Reuters

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