Oil Halts Advance

Oil Halts Advance
Oil retreated after the biggest 2-day gain since June.

(Bloomberg) -- Oil retreated after the biggest two-day gain since June as investors grapple with doubts over whether OPEC and its allies will curb production.

Futures slipped as much as 2.1 percent in New York, paring gains of 4.6 percent in the previous two sessions. Saudi Energy Minister Khalid Al-Falih said it’s “premature” to say whether the producer group will agree on efforts to stabilize the oversupplied market and walked back recent statements about the size of any supply reduction. Meanwhile, industry data signaled crude stockpiles in America expanded last week.

Crude breached $53 a barrel for the first time in almost two weeks after Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman agreed they would cooperate on managing the oil market. But in talks between officials after that meeting, Saudi Arabia argued Russian proposals, which implied Moscow would cut by a maximum of 150,000 barrels a day, would leave the kingdom shouldering too much of the burden.

“Al-Falih’s comments came only days before the actual meeting, creating uncertainties that are keeping the market unstable,” said Hong Sungki, a commodities trader at NH Investment & Securities Co. in Seoul. “It also shows Saudi Arabia is unhappy with Russia’s reluctance to actively support the group’s effort to curb production to bolster prices.”

West Texas Intermediate for January delivery dropped as much as $1.09 to $52.16 a barrel on the New York Mercantile Exchange, and was at $52.39 at 7:55 a.m. in London. Futures closed at $53.25, up 30 cents, on Tuesday. Total volume traded was about 73 percent above the 100-day average.

Brent for February settlement fell 99 cents to $61.09 a barrel on London’s ICE Futures Europe exchange, after rising 39 cents on Tuesday. The global benchmark crude was at an $8.51 premium to WTI for the same month.

In an interview with Bloomberg, Al-Falih said Moscow backs curbs “in principle,” but it’s too early to say what they will agree to. On the size of cuts, he said the group still needs to “figure out what needs to be done and by how much.” The comments were less definitive than those made last month, when he called for a reduction of 1 million barrels a day.

The world’s two top oil exporters will have another chance to hammer out a deal when Al-Falih and his Russian counterpart Alexander Novak attend the Joint Ministerial Monitoring Committee’s meeting in Vienna Wednesday, a day ahead of the full OPEC gathering on Dec 6. The panel oversees compliance of the 2016 output pact between OPEC and its partners.

President Donald Trump’s constant pressure on the Organization of Petroleum Exporting Countries to lower prices may further complicate the deliberations in Vienna. Trump is seen as one of Prince Mohammed’s few remaining allies in Washington after the murder of Jamal Khashoggi generated intense criticism from American lawmakers.

In the U.S., the American Petroleum Institute was said to report nationwide crude stockpiles increased 5.36 million barrels last week. If confirmed by government data on Thursday, it will mark an 11th consecutive week of gains. Inventories for gasoline and diesel were also said to have risen.

To contact the reporter on this story: Heesu Lee in Seoul at hlee425@bloomberg.net To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Ovais Subhani


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