Oil extends slide below $46 on scepticism over OPEC deal

London - Oil extended declines below $46 a barrel in New York amid skepticism that the Organisation of Petroleum Exporting Countries (OPEC) will be able to reach an agreement to cut production this week.

Futures fell as much as 2% after dropping 4% on Friday. Saudi Arabia suggested Sunday that OPEC doesn’t necessarily need to curb output, after pulling out of a scheduled meeting with non-members including Russia.

OPEC will hold talks in Vienna on Monday to try to resolve differences, while ministers from Algeria and Venezuela head to Moscow to get the biggest non-OPEC producer on board OPEC is heading into the last stretch of negotiations before its November 30 meeting to adopt a supply deal that was first floated in September.

Oil prices whipsawed last week as various OPEC members and Russia tried to position themselves ahead of a final accord to reduce production. While Saudi Arabia has pushed to reverse OPEC’s pump-at-will policy, Energy Minister Khalid Al-Falih said on Sunday the oil market would recover in 2017 even without cuts.

"The past weeks’ back and forth of diplomacy reveals how small the common denominator is," Norbert Ruecker, head of commodity research at Julius Baer Group in Zurich, said by e-mail.

"Chances for a deal are high but we remain sceptical that it has teeth and see no lasting impact on prices."

West Texas Intermediate for January delivery dropped as much as 92 cents to $45.14 a barrel on the New York Mercantile Exchange and was at $45.68 as of 12 London time.

Prices lost $1.90 to $46.06 a barrel on Friday. Total volume traded on Monday was 67% higher than the 100-day average.

Brent for January settlement fell as much as 96 cents, to $46.28 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 3.6% to $47.24 on Friday. The global benchmark traded at a $1.20 premium to WTI.

Saudi stance

Cutting output is not the only option available to OPEC; it can also depend on a recovery in consumption from countries such as the US to steady the market, Al-Falih said in Dhahran, eastern Saudi Arabia, according to local newspaper Asharq al-Awsat.

Russia has so far resisted requests to join a cut, offering instead to freeze production at current levels. Energy Minister Alexander Novak has insisted that OPEC reach an internal consensus on output curbs before Russia considers joining an accord.

Algerian Energy Minister Noureddine Boutarfa, architect of the preliminary agreement reached in Algiers, will travel to Moscow on Monday with his Venezuelan counterpart before meeting Iraq’s oil minister on Tuesday in Vienna, two OPEC delegates said.

He presented a proposal on Saturday to Iranian Oil Minister Bijan Namdar Zanganeh for an OPEC output cut of 1.1 million barrels a day, according to an Iranian Oil Ministry official.

Oil-market news:

Iran’s Persian Gulf Petrochemical Industries Company is in talks with Asian companies to raise as much as €1bn for an expansion including a methanol project intended to serve China and other Asian customers.

Shale drillers have added 158 rigs since May, according to Baker Hughes.

At the same time, companies such as Chesapeake Energy Corporation and EOG Resources have boosted efficiency by cramming more sand into wells, aiming to extend their reach miles further.