Oil prices slumped on Monday, January 16, weighed on by doubts that large oil producers will cut production as promised.
Benchmark Brent crude oil LCOc1 was down 10 cents a barrel at $55.35 by 0915 GMT (04:15 a.m. ET) and U.S. LIGHT crude CLc1 fell 10 cents to $52.27.
The Organisation of the Petroleum Exporting Countries, OPEC, has agreed to cut production by 1.2 million barrels per day (bpd) to 32.5 million bpd from Jan. 1 in an attempt to clear global oversupply that has depressed prices for more than two years.
Russia and other key exporters outside OPEC have said they will also cut output. However, global oil production remains high and, with inventories near record levels in many areas, investors doubt that OPEC and its allies can trim output enough to push up prices.
“Cuts by OPEC and non-OPEC countries have just started and it will take some time for them to filter through,” said Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo.
“We do not really expect the oil price to strengthen much more in the first quarter of 2017.”
Saudi Arabian Energy Minister Khalid al-Falih said on Monday that OPEC and non-OPEC producers are unlikely to extend their agreement to cut oil output beyond six months, Reuters reports.
