Oil falls as OPEC+ resumes talks after impasse on output cut

Oil prices fell on Thursday as producers including Saudi Arabia and Russia locked horns over the need to extend record production cuts set in place during the first wave of the Covid19 pandemic.

Brent crude was down 26 cents, or 0.5%, at $47.99 a barrel by 1151 GMT, and U.S. oil fell 29 cents, or 0.6%, to $44.99 a barrel.

“The market is cautious. Oil prices lost some gains this week as negotiations within the OPEC+ group did not prove to be as smooth as expected,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen.

“Prices are logically marginally falling but the trend could quickly reverse should some white smoke come from the OPEC+ meeting,” he added.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, known as OPEC+, were to resume discussions on Thursday to agree on policies for 2021 after earlier talks produced no compromise on how to tackle weak oil demand amid a new coronavirus wave.

Two OPEC+ sources told Reuters on Thursday the group was leaning towards an oil cuts rollover with a gradual increase in output over the coming months.

OPEC+ had been widely expected to roll over oil cuts of 7.7 million barrels per day, or 8% of global supplies, at least until March 2021.

But after hopes for a speedy approval of Covid-19 vaccines spurred a rally in oil prices at the end of November, some producers questioned the need to tighten oil policy, which is supported by OPEC leader Saudi Arabia.

“It is still expected that the group will come to a deal,” ING Economics said in a note.

Britain approved Pfizer Inc’s Covid-19 vaccine on Wednesday, jumping ahead in a global race to start the most crucial mass inoculation programme in history.

In the United States, crude stockpiles fell last week, while gasoline and distillate inventories rose sharply as refiners slowed production amid weakening demand, the Energy Information Administration said on Wednesday.

Oil stocks fell by 679,000 barrels in the week to Novembr 27, less than the 2.4 million-barrel decline forecast in a Reuters poll of analysts.

Gasoline stocks increased by 3.5 million barrels, while distillate inventories were up by 3.2 million barrels.

Adding to international supplies, Venezuela’s crude exports almost doubled last month, according to data from the staterun PDVSA and Refinitiv Eikon.