Oil traded near the lowest level in a month in New York after weekend talks between OPEC and other major producers failed to yield concrete details on an accord to reduce the global crude surplus.
Futures were little changed after sliding 2.1 percent at the end of last week. The Organization of Petroleum Exporting Countries ended talks with non-members such as Russia and Brazil on Saturday without a joint commitment to cut production, Brazil’s Oil and Gas Secretary Marcio Felix said. The previous day, OPEC still hadn’t resolved how to implement an output cut announced in Algiers last month, according to delegates who took part.
Oil has fluctuated near $50 a barrel amid uncertainty over whether OPEC can implement the first supply cuts in eight years at its official November meeting. As the gathering opened in Vienna last week, Secretary-General Mohammed Barkindo warned of the consequences if producers don’t follow through on an agreement to reduce output. The price recovery has already taken far too long and suppliers can’t risk delaying it further, he said.
“The price balloon is deflating in response to increasing doubts that OPEC will deliver a credible agreement on production control,” said David Hufton, chief executive officer of brokers PVM Group in London. 'The combined OPEC and non-OPEC dance rhythm is one-step forward followed by two steps back.”
West Texas Intermediate for December delivery dropped as much as 53 cents on the New York Mercantile Exchange, and was at $48.62, down 8 cents, at 9:58 a.m. London time. The contract fell $1.02 to $48.70 on Friday. Total volume traded Monday was about 13 percent below the 100-day average. Prices are set for a third monthly gain, though less than 1 percent.
Brent for December settlement, which expires Monday, lost as much as 42 cents, or 0.8 percent, to $49.29 a barrel on the London-based ICE Futures Europe exchange after falling 1.5 percent Friday. Front-month prices are up 0.7 percent this month. The global benchmark traded at a premium of 97 cents to WTI. The more-active January contract was little changed at $50.67.
For a story on money managers increasing bearish bets on WTI, click here.
OPEC agreed in Algiers last month to trim output to a range of 32.5 million to 33 million barrels a day and is due to finalize the deal at its Nov. 30 summit in Vienna. The accord helped push prices to a 15-month high above $50 a barrel earlier this month, although they have subsequently fallen amid doubts the group will follow through on the pledge. More than 18 hours of talks over two days in the Austrian capital this weekend yielded little more than a promise that the world’s largest producers would keep on talking.
Some progress was made Friday on the methodology to be used for allocating output quotas to OPEC members, said one delegate, who asked not to be identified because the talks were private. Russia reiterated that it’s willing to freeze production, rather than cut, but only if there is an OPEC agreement first, according to participants at a meeting on Saturday.
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