Futures dropped below $59 a barrel New York on Thursday as headlines from the cartel’s gathering in Vienna offered conflicting signals about the progress and content of closed-door discussions. The latest indications were that the group agreed to adjust official production targets but it remains to be seen if that will result in real reductions despite prospects for a global oversupply.
“It’s OPEC day and there is a sense of cautious optimism in the air,” PVM Oil Associates analyst Stephen Brennock wrote in a report. “There is a consensus among market players that the oil cartel will deepen supply curbs in order to avert a supply imbalance in the new year.”
A key committee convened by the Organization of Petroleum Exporting Countries and allies such as Russia recommended cutting overall output quotas by 500,000 barrels a day during the first quarter, according to Russian Oil Minister Alexander Novak said. However, the committee didn’t discuss how the reduction would be distributed among member nations, he said.
West Texas Intermediate for January delivery rose 46 cents to $58.89 a barrel at 11:41 a.m. on the New York Mercantile Exchange after earlier breaching $59 for the first time in 2 1/2 months. For the week, the contract was poised for its steepest gain since June.
for February settlement advanced 45 cents to $63.45 on the London-based ICE (NYSE:) Futures Europe Exchange. The global benchmark crude traded at a $4.90 premium to WTI for the same month.
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