Oil prices fell over one per cent on Friday on rising crude stocks and despite expectations that OPEC and Russia will agree to a production cut next week at the cartel’s meeting in Vienna. Anadarko photo by Mike Goldwater.
Oil prices down 20 per cent in November
Oil prices were down on Friday on rising crude inventories and despite expectations that OPEC along with Russia will agree to another production cut at the cartel’s meeting in Vienna next week.
By 3:11 p.m., EST, benchmark Brent crude futures had fallen 79 cent to $59.12/barrel and US West Texas Intermediate was down 83 cents to $50.62/barrel.
North Sea Brent LCOc1 and US crude CLc1 have had their weakest month in over 10 years this November. The two have each lost over 20 per cent this month.
The world’s three top oil producers, the United States, Russia and Saudi Arabia are all represented at the G20 meeting in Buenos Aires this weekend. Analysts from Capital Economics said in a note that by early next week, markets will be driven by the outcome of trade talks between the US and China at the G20.
Later in the week, attention will shift to the OPEC meeting where Saudi Arabia is hoping to convince the cartel and Russia to sign on to another supply cut deal.
“By the end of the week, markets will be firmly focussed on the biannual OPEC meeting on Thursday and Friday and oil prices could fall sharply if OPEC leaves output unchanged,” the analysts wrote. “We expect OPEC to announce a small cut in production, in conjunction with Russia.”
Rising production in the US and Russia along with some OPEC nations has swollen global crude inventories and pushed down oil prices. A slowdown in crude demand growth is compounding the growing oversupply.
“At the heart of the malaise are concerns that OPEC+ will not do enough to address the current oversupply,” Stephen Brennock, analyst at London brokerage PVM Oil told Reuters.
According to a monthly survey by Reuters, November output from the 12 OPEC nations participating in the supply cut pact fell by about 110,000 barrels per day from October. OPEC’s output overall fell by 160,000 b/d.
“The next OPEC meeting is going to prove a pivotal moment for the direction of oil prices in 2019,” BNP Paribas strategist Harry Tchilinguirian told Reuters.
“A decision will have to be made against a background of strong U.S. shale oil supply growth, and for now, weaker expectations on global oil demand growth.”
Rising US production is boosting inventories in the United States. According to the US Energy Information Administration, US crude stocks have risen for 10 straight weeks and now sit at 450.5 million barrels, the highest in a year.
As well, US oil reserves in 2017 topped a 47-year old record when they grew to 6.4 billion barrels, according to the EIA.
Baker Hughes reported that the number of oil rigs in the United States grew by two this week to 887. Meanwhile, in Canada, the oil rig count dropped by five to 119.