(Bloomberg) — Crude slipped as Saudi Arabia’s energy minister backed a smaller-than-expected supply cut.
Futures in New York and London fell about 5 percent on Thursday. A million-barrel reduction in daily supplies from OPEC and allies such as Russia will be adequate to balance supply and demand without shocking the market, Saudi Arabian Oil Minister Khalid Al-Falih told reporters in Vienna. The Organization of Petroleum Exporting Countries hasn’t hammered out a final agreement yet, according to a delegate. Oil’s sell-off also gathered steam as equity markets tanked.
“People were really hoping to hear something closer to 1.3 million barrels a day and we haven’t gotten an official announcement yet,” said Ashley Petersen, an oil analyst at Stratas Advisors LLC in New York. Given Saudi Arabia’s “history of over-compliance, markets are a little bit preemptively disappointed.”
Traders are waiting for a formal deal as OPEC gathers in the Austrian capital, though one delegate said it’s possible an agreement will elude the group on Thursday. The cartel may propose to Russia that the group cut its own output by 900,000 to 1 million barrels a day and then seek further reductions from non-OPEC nations. The group will meet with allied oil producers on Friday.
West Texas Intermediate for January delivery fell $2.16 at $50.73 a barrel at 10:26 a.m. on the New York Mercantile Exchange. Total volume traded was double the 100-day average.
Brent for February settlement tumbled $1.93 to $59.63 on London’s ICE Futures Europe exchange. The global benchmark crude traded at an $8.54 premium to WTI for the same month.
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Amid OPEC’s ongoing talks, Trump tweeted on Wednesday saying the world “does not want to see, or need, higher oil prices.” Saudi Arabia may not be able to defy Trump’s demand for lower prices, after the killing of Jamal Khashoggi unleashed a fusillade of criticism from American lawmakers, leaving the president as one of Crown Prince Mohammed bin Salman’s few remaining allies in Washington.
Meanwhile, U.S. crude stockpiles rose 5.36 million barrels last week, the American Petroleum Institute was said to report. The Energy Information Administration is scheduled to release a tally Thursday that probably will show a 2 million-barrel decline, according to a Bloomberg survey of analysts.
–With assistance from Tsuyoshi Inajima and Alex Longley.
To contact the reporter on this story: Jessica Summers in New York at [email protected]
To contact the editors responsible for this story: Simon Casey at [email protected], Joe Carroll, Catherine Traywick
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