11 December, 2016
Oil prices fell on Tuesday as traders took profits in the wake of a powerful rally that propelled prices to 16-month highs after the Organization of the Petroleum Exporting Countries agreement to cut output for the first time in eight years.
Brent futures fell 93 cents, or 1.7 percent, to settle at $53.00 a barrel, while USA crude lost $1.16, or 2.3 percent, to settle at $49.77. Europe's benchmark Brent crude futures for delivery in February was also down 0.5% Wednesday at $53.65, off Monday's high of $54.94.
Globally, oversupply is estimated at 1.4-1.7 mbpd at present, which means the OPEC production cut would balance out demand and supply in the second half of 2017.
Traders and analysts said the boost from last week's decision by OPEC to cut crude production had faded and the cartel's promise had been undermined by data showing rising production from within its member countries and Russian Federation.
The news came just days after OPEC and Russian Federation agreed an historic deal to cut output in 2017, triggering a more than 10 percent rise in prices, in a bid to end a fuel supply overhang.
OPEC's landmark oil-production deal may prove effective in running down global inventories, but analysts hold little hope for much of a rise in prices, a Reuters poll showed on Thursday.
Ukraine warns Russian Federation of rocket tests near Crimea
Ukraine said the missiles would not enter Crimean airspace, sidestepping a potential confrontation with Russian Federation . He said the missiles would come as close as 30 kilometers, or about 18 miles, to Crimean airspace.
Kazakhstan may offer to freeze its oil output at last month's level at the talks between OPEC and non-OPEC producers in Vienna, Kazakh Energy Minister Kanat Bozumbayev said on Friday.
Non-OPEC nations are also expected to contribute an output cut of 600,000 barrels per day (bpd) 300,000 of which will be undertaken by Russian Federation.
Stocks data on Wednesday provided little guidance on the state of the USA oil market.
"Oil markets are on track to tighten over 2017, which will be accelerated by OPEC's decision to reduce production alongside non-OPEC countries", said BMI Research.
Additionally, with the financial situation of the USA oil and gas industry improving compared with last year, Crisil expects production ramp-ups to be faster next year, which, in turn, would act as a natural check on crude prices. Non-OPEC nations consider the re-balancing of the global oil market to be in progress, they said.
Kazakhstan, the next-largest producer with daily output of about 1.7 million barrels, will decide on whether to cut output after talks with OPEC, the Astana-based Energy Ministry press service said in a statement December 2. Brent crude, the worldwide benchmark of prices, dropped 1% to $54.40.