Oil prices pare gains on weaker stocks, strong dollar
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