Oil on Tuesday, December 5, dips towards $62 a barrel as investors took profits in the wake of OPEC and other producers’ pact to extend output cuts, although an expected drop in U.S. crude inventories lent support.
Brent crude , the global benchmark, was down 14 cents at $62.31 a barrel by 1218 GMT, sliding for a second session. U.S. crude, known as West Texas Intermediate, was down 28 cents at $57.19, Reuters reports.
Crude also slipped on concerns that the OPEC-led producer group’s Nov. 30 decision to prolong their supply-cutting deal through 2018 could bolster U.S. output, which climbed to nearly 9.5 million barrels per day in September.
“Oil prices are continuing to crumble,” said Carsten Fritsch, analyst at Commerzbank. “We attribute the price slide to profit taking by speculative investors, who were holding almost record-high net long positions ahead of OPEC’s meeting.”
The Organization of the Petroleum Exporting Countries, Russia and other non-OPEC producers last week extended the deal to cut output by 1.8 million barrels per day (bpd) until the end of 2018.
OPEC and its allies are trying to get rid of excess oil in storage. They have made progress in this task and the latest U.S. inventory reports are likely to show a third straight weekly drop in crude stocks. [EIA/S]
Analysts expect the reports from industry group American Petroleum Institute (API) and the government’s Energy Information Administration (EIA) to show crude stocks fell by 3.5 million barrels.
The API report is out at 2130 GMT on Tuesday, followed by the government supply report on Wednesday.
OPEC has shown strong compliance with the supply cut pledge and in November output fell by 300,000 bpd to its lowest since May, according to a Reuters survey.
However, rising U.S. oil production presents a headwind for OPEC’s efforts and data last week showed U.S. crude output rose to nearly 9.5 million bpd in September, approaching the high of 9.63 million bpd seen in 2015, Reuters reports.