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Hong Kong - Oil extended its decline below $45 a barrel as focus shifted to OPEC’s ability to stabilise prices after markets were roiled this week by Donald Trump’s largely unexpected US presidential election win.
Futures fell as much as 0.7% in New York, trimming the first weekly advance in three weeks. Prices may retreat amid “ relentless global supply growth” unless the Organization of Petroleum Exporting Countries enacts significant output cuts, the International Energy Agency said on Thursday.
The dollar is poised for the biggest weekly gain since May 2015. A stronger U.S. currency reduces the appeal of commodities priced in the dollar.
Oil has slipped below $45 a barrel following OPEC’s failure last month to agree on output quotas for member countries.
Targets must be agreed upon before the group’s deal to cut production can be finalized at a meeting on November 30. While investors took comfort from Trump’s conciliatory speech on Wednesday, rising US crude supplies served as a reminder of the inventory overhang.
“The focus is now on OPEC,” said Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney. “The Trump factor is over, it’s about supply and demand now. The lower oil slips, the more pressure there is for a deal to be done.”
West Texas Intermediate for December delivery slid as much as 32 cents to $44.34 a barrel on the New York Mercantile Exchange, and was at $44.42 at 08:15. The contract lost 61c to $44.66 on Thursday. Total volume traded was about 31% below the 100-day average. Prices are up 0.8% this week.
Supply growth
Brent for January settlement lost as much as 27c to $45.57 a barrel on the London-based ICE Futures Europe exchange. The contract fell 52c to $45.84 on Thursday. Prices are 0.2% higher this week. The global benchmark traded at a premium of 52c to January WTI.
Non-OPEC producers such as Brazil, Canada, Kazakhstan and Russia will raise output by 500 000 barrels a day in 2017, after enduring their biggest slump in more than two decades, the IEA said in a report. OPEC meets in Vienna at the end of the month as Iraq seeks to be excluded from cuts because it’s embroiled in a war with Islamic militants.
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, is poised for the biggest weekly gain in almost a year-and-a-half on speculation Trump’s fiscal-stimulus proposals will boost inflation.
Oil-market news:
The probability of OPEC implementing output cuts is low because the group has fragmented as members seek exemptions, according to Abhishek Deshpande, chief energy analyst at Natixis. Petroleo Brasileiro SA’s loss widened in the third quarter as the state-controlled oil producer posted a $4.6bn impairment related to currency swings and declining prices.
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