© Bloomberg. A worker collects a sample of light refined diesel fuel for quality control purposes at a testing facility in the Duna oil refinery.(Bloomberg) — Oil notched its fourth decline in five sessions in New York, as markets digested political uncertainty in Germany amid anticipation about OPEC’s next move.
Futures slipped 0.8 percent, reversing course after a 2.6 percent gain Friday. In Germany, the breakdown of talks to form a new government coalition raised questions about the future of Europe’s biggest economy. That led the U.S. dollar to rally, reducing the appeal of commodities. The Organization of Petroleum Exporting Countries, meanwhile, will be briefed this week by oil-service provider Schlumberger Ltd. as well as Citigroup Inc (NYSE:). as the cartel debates whether to extend output cuts at a summit in Vienna Nov. 30.
The political turmoil in Germany helped strengthen the dollar, which tends to depress oil prices, said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. Data released Friday showed wagers on lower prices rose by the most in five months through the week ended Nov. 14 as doubts persist about whether the Saudi Arabia-led cuts will be extended.
“Politically, around the world, there are just a lot of plates spinning,” O’Grady said in a telephone interview Monday. “There’s potentially a lot of supply out there and the only thing keeping it off the market right now is OPEC discipline.”
Traders may also be closing out some bullish bets on crude ahead of the Thanksgiving holiday in the U.S., when light volumes could make it harder to adjust to any bearish news, O’Grady said. “What you’re seeing is a lot of position squaring,” he said.
West Texas Intermediate for December delivery, which expires Monday, slipped 46 cents to $56.09 a barrel on the New York Mercantile Exchange, after declining 0.3 percent last week. Total volume traded was about 20 percent below the 100-day average. The more-active January contract dropped 29 cents to $56.42.
To watch interview with Saudi oil minister on OPEC cuts, click here
Brent for January settlement lost 50 cents to $62.22 a barrel on the London-based ICE Futures Europe exchange, after dropping 1.3 percent last week. The global benchmark crude traded at a premium of $5.79 to January WTI.
Saudi Arabia has had extensive consultations with Russia, Saudi energy minister Khalid Al-Falih said on Thursday. OPEC will ensure that its exit strategy from the current accord will be a gradual adjustment that prevents the return of any glut, he said. Oil inventories are unlikely to drain to average levels by the time the OPEC agreement expires at the end of March, the minister added.
The U.S. drilling-rig count was unchanged at 738 on Friday, data from Baker Hughes showed.
Oil dipped slightly last week on a weaker demand outlook while Russia cast doubts on the timing of a decision to extend supply cuts. An extension still remains likely, according to PVM Oil Associates Ltd.
“It is widely believed that OPEC, together with 10 non-OPEC countries, will roll over their production for the whole of 2018,” said Tamas Varga, an analyst at PVM in London.
Oil-market news:
- Most OPEC members are in favor of extending the supply cuts, Iranian Oil Minister Bijan Namdar Zanganeh said, according to the state-run IRNA news agency.
- Japan’s crude imports from Russia dropped to a five-year low in October, according to preliminary data from the Ministry of Finance.
- In the U.S., Nebraska regulators approved TransCanada Corp.’s Keystone XL oil sands pipeline Monday, but required an alternative route that could offer opponents new avenues to challenge the project.
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Source: Investing.com
