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Oil prices static on uncertainty over planned production cut

Published 11/24/2016, 06:17 AM
© Reuters. USBIGA worker checks the valve of an oil pipe at Al-Sheiba oil refinery in the southern Iraq city of Basra
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By Ahmad Ghaddar

LONDON (Reuters) - Oil prices were little changed on Thursday as uncertainty ahead of a planned OPEC-led crude production cut and thin liquidity during the U.S. Thanksgiving holiday kept traders from making big new bets.

At 1040 GMT (5:40 a.m. ET), Brent crude futures (LCOc1) were trading at $48.89, down 6 cents from their close. U.S. West Texas Intermediate (WTI) crude (CLc1) was down 2 cents at $47.94 per barrel.

Traders said market activity was low due to the U.S. holiday, and there was a reluctance to take on big price bets due to uncertainty about a planned oil production cut, led by the Organization of the Petroleum Exporting Countries (OPEC).

OPEC is due to meet on Nov. 30 to coordinate a cut, potentially together with non-OPEC member Russia.

Russia could revise down its 2017 oil production plans if a global output freeze pact comes into force, effectively cutting output by 200,000-300,000 barrels per day, Energy Minister Alexander Novak said on Thursday.

OPEC will probably propose other producers cut their oil production by 880,000 barrels per day for six months starting from Jan. 1 2017, Azerbaijan Energy Minister Natig Aliyev wrote in a local newspaper on Thursday.

But an OPEC source told Reuters that OPEC was yet to make a final proposal to non-OPEC countries on joint production cuts, which will be discussed on Nov. 28 in Vienna.

Venezuela's President Nicolas Maduro said on Wednesday an OPEC deal to cut output and hike oil prices was "imminent," and dispatched his oil minister to Russia to help bring other producers on board..

Most analysts believe some form of production cut will be agreed, but it is uncertain whether it will be enough to prop up a market that has been dogged by a supply overhang for over two years, according to the International Energy Agency (IEA).

"We expect OPEC will reach an agreement at next week's biannual meeting in Vienna... If OPEC does successfully reach an agreement, prices are likely to test the year high in Brent of $53 per barrel," ANZ bank said in a note to clients on Thursday.

© Reuters. USBIGA worker checks the valve of an oil pipe at Al-Sheiba oil refinery in the southern Iraq city of Basra

IEA Director Fatih Birol told Reuters in Tokyo on Thursday that even if production is cut, prices could soon come back under downward pressure again as the OPEC-led cut would enable U.S. shale oil drillers to massively increase their own output.

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