Oil Prices Weak as OPEC Delays Supply Cuts

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Oil prices slipped on Friday, dragged down by OPEC’s decision to delay a final decision to slash outputs, awaiting support from the non-OPEC but key member Russia.

gas pumps with oil lined up at a gas station
Oil prices slip down after the delay in OPEC’s out cut decisions.

International Brent crude oil futures slipped lower than $60 per barrel early in the session, trading at $59.50 per barrel, down 56 cents, or 0.9 percent from their last close.

US West Texas Intermediate crude futures were at $51.24 per barrel, down 25 cents or 0.5 percent.

The slips came after crude slumped by nearly 3 percent during the previous day, with the Organization of the Petroleum Exporting Countries (OPEC) finishing a meeting at its headquarters in Vienna, Austria, on Thursday without announcing a decision to slash crude supply, rather they got ready to debate the matter on Friday.

Meanwhile, analysts still expect some form of supply reduction to be decided.

“We are beginning to witness the outline of the next iteration of production cuts, with OPEC conforming to cut its own production by around 1 million barrels per day, with the cartel lobbying non-OPEC members to contribute more,” said Japanese bank MUFG in a note.

Oil producers have been blown by a 30-percent plunge in crude prices since October as supply surges just as the demand outlook weakens amid a global economic slowdown.

Oil output from the world’s biggest producers – OPEC, Russia, and the United States – has increased by 3.3 million barrels per day since the end of 2017 to 56.38 million barrels per day, meeting almost 60 percent of global consumption.

That increase alone is equal to the output of the major OPEC producer the United Arab Emirates.

The surge is largely down to rocketing US crude oil production, which has increased by 2.5 million barrels per day since early 2016 to a record 11.7 million barrels per day, making the United States the world’s biggest oil producer.

As a consequence, the United States last week exported more crude oil and fuel than it imported for the first time on records going back to 1973, according to the data released on Thursday.

Elsewhere in the commodity market, gold prices perked up while the dollar struggled on Friday in Asia after the Federal Reserve chairman Jerome Powell delivered a bullish assessment of the US economy on Thursday.

gold bars on top of sheets of information

“Our economy is currently performing very well overall, with strong job creation and gradually rising wages,” said Powell in his final scheduled public remarks before the central bank goes into a blackout period ahead of its December 18 to 19 policy meeting. “In fact, by many national-level measures, our labour market is very strong.”

Reports on Thursday suggested that the Fed could tighten monetary policy at a slower pace than expected.

Benchmark COMEX gold futures for February settled higher $1.60 at 1,245.20 per troy ounce as the flight to safety kept the yellow metal’s newfound supported above $1,240 intact.

Meanwhile, gold-backed exchange-traded funds (ETFs) registered inflows in all the world’s major regions in November, as volatile stock markets fueled flight-to-safety buying, the World Gold Council said on Thursday.