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Nov 27, 2018

Crude Oil at Close Report: US crude dips 7 cents, settling at $51.56, as market steadies ahead of G-20, OPEC meetings

The Khurais oilfield operated by oil giant Saudi Aramco, about 160 km (99 miles) from Riyadh.
Ali Jarekji | Reuters
The Khurais oilfield operated by oil giant Saudi Aramco, about 160 km (99 miles) from Riyadh.
Oil prices turned firmly lower during midday trading on Tuesday. Crude futures were little changed earlier in the session, depressed by a report of record Saudi production but supported by expectations that oil exporters would agree to cut output at an OPEC meeting next week.
Brent crude oil was down 25 cents at $60.23, hovering above a 13-month low of $58.41 reached on Friday.
U.S. West Texas Intermediate crude fell 2 cents to $51.61. In the previous session, WTI fell to $50.10, its lowest level since mid-October 2017.
Oil prices have lost almost a third of their value since early October, weighed down by an emerging supply overhang and widespread financial market weakness. Prices rallied sharply on Monday, with Brent rising almost 2.9 percent, but the market has struggled to stay positive.
"The energy complex is making a half-hearted attempt to extend gains," said Stephen Brennock, analyst at London brokerage PVM Oil. "However, upside potential is being capped by two upcoming risk events, namely the G20 summit and next weeks OPEC meeting."
"A wait-and-see approach is therefore likely to prevail, which in turn will act as a damper on any looming price swings."
Leaders of the Group of 20 nations (G20), the world's biggest economies, meet on Nov. 30 and Dec. 1, with the trade war between Washington and Beijing top of the agenda. With the top three crude producers — Russia, the United States and Saudi Arabia — all present, oil policy is expected to be discussed.
OPEC meets in Vienna on Dec. 6 to discuss output policy together with some non-OPEC producers, including Russia.
Saudi Arabia raised oil production to an all-time high in November, an industry source told Reuters on Monday, pumping 11.1 million to 11.3 million barrels per day (bpd). Saudi Arabia indicated last month it would pump 11 million bpd in November.
But the kingdom has been pushing for a collective production cut by members of OPEC, indicating it may reduce supply by 500,000 bpd.
Norbert Ruecker, head of commodity research at Swiss bank Julius Baer, said oil had buckled after "a surprisingly swift and pronounced change in the market mood from shortage fears to glut concerns" while the world economy was also slowing down.
U.S. President Donald Trump has put pressure on Saudi Arabia, OPEC's de-facto leader, not to cut production, but most analysts expect OPEC to start withholding some supply soon.
"We suspect that producers will start to withhold exports in the coming months, putting a floor under prices," said Capital Economics.
Fereidun Fesharaki, chairman of energy consultancy FGE, said a failure by OPEC and Russia to cut supply significantly would mean crude prices would "fall further, perhaps (with) Brent at $50 per barrel and WTI of $40 per barrel or less."
— CNBC's Tom DiChristopher contributed to this report.
WATCH:Here's what drives the price of oil

Source CNBC

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