London — Crude oil futures took a nosedive in European trading on concerns producer group OPEC will fail to deliver a sufficient production cut to restore balance to the market.
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At 1355 GMT, ICE February Brent crude futures were down $1.51 cents (2.51%) from Wednesday's settle at $60.05/b, while the NYMEX January light sweet crude contract was $1.58 cents (3.07%) lower at $51.31/b.
Prices continue to trade on both sides of $60/b, and marked a near-5% fall from yesterday's settle earlier in the morning session.
As OPEC ministers meet in Vienna to decide on how to manage the market, Saudi Arabia's energy minister Khalid al-Falih on Thursday said an OPEC/non-OPEC oil production cut of 1 million b/d "would be adequate," though the coalition is considering proposals ranging from 500,000 to 1.5 million b/d. He also injected uncertainty into the disappointment by saying that OPEC is not certain to reach a deal, noting it was "still an if" that the group would cut output.
At the same time, Iranian oil minister Bijan Zanganeh, whose sanctions-hit country is seeking an exemption, told reporters OPEC was considering how to deal with a projected 1.3 million-2.4 million b/d surplus, suggesting the resurgence of a glut in the market may take time to reverse, especially with the US, Russia and Saudi Arabia all pumping at record highs.
Ten non-OPEC producers led by Russia will join the talks Friday, and Falih said that Russia had already agreed to participate in cuts.
Head of commodity strategy at SaxoBank Ole Hansen said that "comments haven't been price-friendly and are adding pressure to the market."
"The momentum is quite heavy. Significant cuts need to be introduced to arrest the slide," Hansen said, adding that if "they don't come up with something strong we are potentially really looking at $50/b before year-end" and that "the comments are creating a lower level for the market to bounce from."
Oil market fundamentals ahead of the meeting have also given reason for futures to trade in the red.
OPEC pumped 40,000 b/d more crude in November than the month before at 33.08 million b/d, the highest monthly total since July 2017, the latest survey by S&P Global Platts showed.
OPEC's biggest producer Saudi Arabia was largely responsible for the increase, pumping 11.02 million b/d in November, up 350,000 b/d from October and setting a record monthly high for the second consecutive month, the survey showed.
The UAE's output rose 130,000 b/d over the same period to 3.3 million b/d.
The Canadian province of Alberta's decision to implement a production cut, due to pipeline constraints that have crashed local oil prices there, showed that "without stewardship over this market, all producers suffer," Falih said.
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