Crude oil fell more than 2.5% Tuesday on concerns about excess global crude supply and limited progress toward resolving the U.S.-China trade dispute, Kallanish Energy reports.
Brent crude futures dropped $1.67, or 2.7%, to settle at $60.76 a barrel. U.S. West Texas Intermediate crude fell $1.84, or 3.2%, to settle at $55.21/Bbl.
Brent has climbed roughly 15% this year, supported by a pact within Opec+, which includes most Opec producers, along with 10 non-Opec producers led by Russia.
Combined, Opec+ adherents have, since Jan. 1, pretty much adhered to cutting production by 1.2 million barrels per day. The cut is slated to run through next March.
Russia is unlikely to agree to deepen cuts in oil output at a meeting with fellow exporters in early December, but could commit to extend existing curbs to support Saudi Arabia, three sources told Reuters.
Opec and its allies will consider whether to deepen cuts to crude supply when they next meet in December due to worries about weak demand growth in 2020, sources from the oil-producing group said.
“We expect uneasy talks in December. Russia will not categorically agree to (deepen) cuts in winter,” a source familiar with the matter told Reuters.
The news on Russia’s stance sent oil prices lower as investors worried about potential oversupply.
Further weighing on prices, a Chinese government source was quoted by CNBC Monday as saying there was gloom in Beijing about prospects for a trade deal. The long-running dispute has hit economic growth prospects.
Oil prices were also hit by a larger than expected rise in Norwegian oil production and the prospect of a further increase in U.S. crude inventories, suggesting ample supplies.
Norway’s production rose in October to beat the official forecast as output from the Johan Sverdrup field began ahead of schedule. This is the largest field to come on stream in the North Sea, home of the Brent contract, for years.
The average estimate from six analysts polled by Reuters was for U.S. crude inventories to have risen by about 1.1 million barrels last week, representing a fourth consecutive weekly gain.
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