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US crude settles at $50.82, striking one-month low on strong dollar, OPEC cut doubts

CNBC

Oil prices fell about 2 percent on Tuesday, extending the previous session’s sharp sell-off, as the U.S. dollar strengthened and doubts over implementation of a global deal to cut output loomed.

Members of the Organization of the Petroleum Exporting Countries (OPEC), such as Saudi Arabia, appear to be reducing production under a global deal to rein in oversupply but it is unclear whether other big producers like Iraq will follow suit.

Iraq, OPEC’s second-largest producer, said it would raise crude exports from its main Basra port to an all-time high in February. The country’s southern oil exports in the first nine days of January held steady near a record high, despite the agreed start of OPEC cuts on Jan. 1, according to a source and loading data.

“The petroleum markets are consolidating at the lower levels reached in Monday trade after doubts emerged over the degree of compliance with OPEC production cuts as Iraqi exports remain high, as well as the more general pace of market rebalancing,” Tim Evans, energy futures specialist at Citigroup said in a note.

“Fresh reports that non-OPEC producers Russia and Kazakhstan have reduced output have produced little price reaction, with the failure to rally on bullish news suggesting that the market is overbought and vulnerable to a further downward correction.”

Oil markets to continue tightening: Expert

Oil markets to continue tightening: Expert   

U.S. light crude oil settled down $1.14, or 2.2 percent, at $50.82. That was its weakest daily closing level since Dec. 7.

Brent crude was last down $1.26 a barrel, or 2.3 percent, to $53.68.

Both crude contracts fell more than $2 a barrel, or around 4 percent, on Monday on doubts that the Organization of the Petroleum Exporting Countries (OPEC) and other key oil producers would cut output as promised to try to reduce a global oversupply.

The dollar rose on Tuesday, retracing early losses against a basket of currencies, and pressuring greenback-denominated oil as a stronger dollar tends to discourages buying by consumers holding other currencies.

Higher oil future prices through December encouraged investors to buy large volumes of crude contracts and many of these “long” positions are likely to be unwound unless the market stays strong, analysts and brokers said.

Supplies are also increasing in North America.

The U.S. Energy Information Administration revised its forecast for 2017 U.S. crude output, expecting growth of 110,000 barrels per day compared with last month’s forecast of a 80,000 bpd year-over-year decline.

 

JP Morgan: Remain constructive on EU oil

JPMorgan: Remain constructive on EU oil   

In the United States, energy companies last week added rigs for a 10th week in a row, extending the drilling recovery into an eighth month as crude prices remained at levels at which many U.S. drillers can operate profitably.

The average Canadian rig count for December 2016 was 209, up 36 from the 173 counted in November 2016, and up 49 from the 160 counted in December 2015, said Matt Stanley, a fuel broker at Freight Services International in Dubai.

“A 30 percent increase in Canadian rigs in a year … The bear in me is well and truly back,” Stanley said.

Weekly inventory data from industry group the American Petroleum Institute (API) is scheduled at 4:30 p.m. EST, with analysts forecasting a 1.2 million-barrel build in U.S. crude stocks in the week to Jan. 6.

Adding one-off supplies, the U.S. Department of Energy on Monday announced a sale for crude from its Strategic Petroleum Reserve (SPR), with bids for 8 million barrels of light, sweet oil due by Jan. 17.

— CNBC’s Tom DiChristopher contributed to this report.

US crude settles at $53.99

US crude settles at $53.99, up slightly this week as traders parse signs OPEC is cutting output

CNBC

Oil traded higher on Friday as investors bought futures ahead of the weekend, but a strong U.S. dollar limited gains, as did lingering doubts about whether all OPEC producers would cut output in line with an agreement.

Trading was choppy, and market players cited end-of-week position-squaring and relatively low volumes during the first trading week of the year.

Brent crude futures, the benchmark for international oil prices, were up 11 cents at $57 per barrel at 2:35 p.m. ET (1935 GMT), having swung from a high of $57.47 to a low of $56.28.

In the United States, West Texas Intermediate (WTI) crude futures settled up 23 cents at $53.99 a barrel, recovering from a session low of $53.32 and off a high of $54.32.

The contract rose about 0.5 percent on the week, marking the fourth straight weekly gain.

US shale to kick in in second half of 2017: JPMorgan

US shale to kick in in second half of 2017: JPMorgan   

“There’s a lot of volatility, or at least changes in direction,” ABN Amro senior energy economist Hans van Cleef said. “People think the long-term trend is up, but after a gain of a few dollars, they take profit.”

The dollar gained broadly against major currencies after the U.S. non-farm payrolls report showed a slowing in hiring in December but an increase in wages, setting the economy up for further interest rate increases from the Federal Reserve this year.

A stronger greenback makes oil more expensive for holders of other currencies.

Top crude exporter Saudi Arabia and fellow Gulf members Abu Dhabi and Kuwait showed signs they were cutting production in line with an agreement by OPEC and other producers, yet market watchers have doubts about overall compliance.

Saudi Arabia’s state oil producer Saudi Aramco has started talks with customers globally on possible cuts of 3 percent to 7 percent in February crude loadings.

A Kuwaiti oil official said that country had also reduced production in line with the deal, and there are also reports of supply cuts from Abu Dhabi.

Energy CEO: We're in initial stages of a recovery

Energy CEO: We’re in initial stages of a recovery   

But there are still doubts about other producers’ compliance.

“There will be some countries who will cheat…we expect zero compliance from Baghdad… And we definitely do not expect the Kurds to join in, given that they are autonomous from the federal government,” Energy Aspects said in its 2017 oil market outlook, published this week.

Iraq Prime Minister Haider al-Abadi said this week the autonomous Kurdish region wasexporting more than its allocated share of oil. Iraq is the Organization of the Petroleum Exporting Countries’ second-largest producer.

Iran has sold more than 13 million barrels of oil that it had long held on tankers at sea, capitalizing on an OPEC output cut deal from which it is exempted to regain market share and court new buyers, according to industry sources and data.

In the past three months, Tehran has sold almost half the oil it had held in floating storage, which had tied up many of its tankers as it struggled to offload stocks in an oversupplied global market.

Oil markets to continue tightening: Expert

Oil markets to continue tightening: Expert   

National Iranian Oil Company (NIOC) is also negotiating with the Philippines over exporting four million barrels of crude per month to the country, Iran’s English-language Press TV quoted a statement published on Friday by the NIOC as saying.

Iran, OPEC’s third-largest oil producer, won special terms from the group’s production cuts agreed on Nov. 30 and may raise output slightly.

Overall supply from OPEC in December fell only slightly to 34.18 million barrels per day (bpd) from a revised 34.38 million bpd in November, according to a Reuters survey this week based on shipping data and information from industry sources.

U.S. energy companies this week added oil rigs for a 10th week in a row, bringing the total count up to 529, the most since December 2015, energy services firm Baker Hughes said on Friday.

Crude up 11 cents

US crude settles at $52.23, up 11 cents, as analysts forecast big draw in stockpiles

CNBC

Oil prices edged higher on Tuesday on forecasts of a steep draw in U.S. crude oil stocks that could indicate a global oversupply is starting to shrink.

Analysts polled by Reuters expected weekly U.S. crude oil inventories to show a draw of 2.4 million barrels in the week ending Dec. 16.

The American Petroleum Institute, an industry group, said U.S. crude stockpiles fell by 4.1 million barrels in the previous week.

International Brent crude oil futures rose 64 cents to $55.56 per barrel at 4:56 p.m. ET (2156 GMT).

U.S. West Texas Intermediate (WTI) crude oil futures settled Tuesday’s trade up 11 cents at $52.23 per barrel.

OPEC Vienna Deal bigger thana nyone thought

OPEC will comply with roughly 80 percent of deal quota: Analyst   

Both contracts rose despite a strong dollar, which hit a 14-year high. Crude prices often decline when the dollar strengthens, as it then becomes more expensive to hold dollar-denominated oil contracts.

“There are expectations that we’ll see supplies start to tighten by the end of the year,” said Phil Flynn, analyst at Price Futures Group in Chicago. “We’ll get more heating oil demand this weekend and could see a drop in production next week and even last week because of the cold temperatures.”

One outlying factor that has flummoxed some analysts has been a series of increases in U.S. inventories at the key oil storage hub in Cushing, Oklahoma. Flynn said this rise has been largely offset by a drop in Gulf Coast inventories.

Crude stocks fell more than expected last week, feeding expectations for another large drop in this week’s figures.

Traders said they were starting to square their books ahead of the upcoming Christmas weekend and the week running up to New Year. As a result, and barring major price-moving news, they said markets would likely remain tepid this week.

A deal to cut global supply among OPEC and non-OPEC producers struck this month has boosted oil prices to 17-month highs. The gains have set up 2016 to be the first year since 2012 in which Brent has risen.

“We are in a wait-and-see mood after OPEC-newsflow caused much volatility,” said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg. “The new balance seems to be between $53 and $57 a barrel on Brent for the next weeks.”

Russian energy minister Alexander Novak told Russian newspaper Vedomosti that Russia may extend a production cut beyond the first half of the year if needed.

Crucial price for oil is $55: Expert

Crucial price for oil is $55: Expert   

Reports late on Monday that Saudi Arabian crude oil exports fell by 176,000 barrels per day (bpd) in October had initially supported markets, but the effect later fizzled out due to an increase in Saudi exports of refined fuel products.

Barclays bank said that it expected a Saudi crude export cut to largely affect light crude oil grades, which mostly go to the United States.

“We think it is likely that the Saudis will curtail production/exports of their Arab Light crude and other lighter crudes this spring, easing the typical pre-summer ramp up in shipments to the U.S.,” the British bank said.

Saudi Arabia’s rising refined product output is part of a wider trend that affects mostly Asia.

Asia is seen posting its biggest net refining capacity additions in three years in 2017, further boosting demand for crude in the world’s biggest and fastest growing oil consuming region.

The increase amounts to about an additional 1.5 percent of refining capacity on top of Asia’s total installed capacity of nearly 29 million bpd.

Still, traders see no outright supply shortage for Asian refineries, as OPEC is shielding most of its Asian customers from the planned cuts.

Crude Oil up 22 cents

US crude settles at $52.12, up 22 cents as supply outlook remains unclear

CNBC

Pump jacks in an oil field over the Monterey Shale formation near Lost Hills, Calif.
Pump jacks in an oil field over the Monterey Shale formation near Lost Hills, Calif.

Oil prices were little changed on Monday, with few headlines to influence a market waiting to see whether U.S. production from shale fields will grow enough to offset planned output cuts by OPEC, Russia and other producers next year.

Brent crude futures traded at $54.93 per barrel at 2:35 p.m. ET (1935 GMT), down 28 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up 22 cents $52.12 a barrel on its last day as the front-month contract.

“Implied U.S. output increases…will offset a significant portion of the planned OPEC production cuts especially since we don’t anticipate sustained strong compliance,” Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.

“While adherence to (OPEC) cutbacks could be quite high initially, we will be surprised by compliance much above 60 percent by the end of the first quarter as (U.S.) shale responds to a higher price environment,” Ritterbusch said.

Look for brent hitting $63 to $65 mark: Expert

Look for brent hitting $63 to $65 mark: Expert   

Traders noted a possible delay in Libyan exports provided some support to oil prices earlier in the session.

Late last week, a group guarding oil infrastructure in Libya said it had reopened a long-blockaded pipeline leading from the oilfields of Sharara and El Feel, but a separate group had prevented a production restart at El Feel.

The U.S. dollar hit 2002 highs last week. It was up by nearly 0.1 percent on Monday. A strong dollar makes oil more expensive for holders of other currencies.

But some analysts expect the strength in oil prices to continue into early 2017 due to the deal between the Organization of the Petroleum Exporting Countries and other producers to cut almost 1.8 million barrels per day (bpd) in oil output from January.

“With investors now expecting a relatively high level of compliance with the production-cut agreements, prices should be well supported,” ANZ bank said on Monday.

$55-$60 oil is okay for reflation trades: Strategist

$55 to $60 oil is OK for reflation trades: Strategist   

Speculators raised their holdings of Brent crude oil futures to a new record high last week, following the first deal in 15 years to be agreed between OPEC and non-OPEC producers to cut output.

However, other market factors cast a shadow on the outlook, preventing prices from rising further.

In the United States, which did not participate in the output-reduction deal, drilling for new oil has increased for seven straight weeks.

Drillers added 12 oil rigs in the week to Dec. 16, bringing the total count to 510, the highest since January, though still below 541 rigs a year ago, energy services firm Baker Hughes said on Friday.

“Since its trough on May 27, 2016, producers have added 194 oil rigs (+61 percent) in the U.S.,” U.S. bank Goldman Sachs said.

As a result, U.S. oil production is edging up, rising from below 8.5 million bpd in July to almost 8.8 million bpd by mid-December.

Weekly Outlook of Crude Oil Futures

Crude Oil Futures – Weekly Outlook: December 19 – 23

© Reuters.  Oil posts weekly gain on signs producers will comply with output cuts© Reuters. Oil posts weekly gain on signs producers will comply with output cuts

Investing.com – Oil futures finished higher on Friday, turning positive for the week amid indications that major crude producers are adhering to their promise to pull back on output.

On the ICE Futures Exchange in London, Brent oil for February delivery jumped $1.19, or 2.2%, to settle at $55.21 a barrel by close of trade Friday, not far from a 17-month high of $57.89 touched earlier in the week.

London-traded Brent futures logged a gain of 88 cents, or 1.6%, on the week.

Elsewhere, on the New York Mercantile Exchange, crude oil for delivery in February tacked on 98 cents, or 1.9%, to end the week at $52.95 a barrel, within sight of a one-and-a-half-year peak of $54.51 logged on December 12.

For the week, New York-traded oil futures rose 40 cents, or 0.8%.

Russian Energy Minister Alexander Novak said on Friday that all Russian oil companies have agreed to cut crude output under Moscow’s agreements with members of the Organization of the Petroleum Exporting Countries.

In addition, Kuwait reportedly notified customers that it would cut supplies from January as part of an effort by OPEC to stabilize the oil market.

OPEC members have agreed to reduce output by a combined 1.2 million barrels per day starting from January 1, their first such deal since 2008.

However, there are some worries in the market about production increases in the U.S. and Libya.

Oilfield services provider Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. last week rose by 12 to 510, a level not seen in almost a year.

Meanwhile, Libya, which is allowed to ramp up production as part of the OPEC deal, restarted operations at two key oilfields. Libyan officials said the restarting of the oilfields and a connected pipeline could bring back more than 200,000 barrels a day of oil within days.

In the week ahead, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.

Oil traders will also continue to pay close attention to comments from global oil producers for further evidence that producers will stick to their agreement to cut production next year.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Tuesday, December 20

The American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.

Wednesday, December 21

The U.S. Energy Information Administration is to release weekly data on oil and gasoline stockpiles.

Friday, December 23

Baker Hughes will release weekly data on the U.S. oil rig count.

Crude Oil in USA down at $50.90

US crude settles down 14 cents at $50.90, hit by dollar strength after Fed rate hike

CNBC

Stronger dollar weighs on oil

Stronger dollar weighs on oil   

Oil prices reversed earlier losses on Thursday after failing to break below technical support levels and as OPEC members told customers they would cut crude supplies as part of the cartel’s agreement to reduce output.

Earlier in the day, prices fell to the lowest level in a week as the dollar rallied following an increase in U.S. interest rates.

The dollar rose to a 14-year high against a basket of other currencies after the U.S. Federal Reserve raised rates for the first time in a year on Wednesday. A stronger dollar, in which oil is traded, tends to hit crude demand as it makes fuel purchases more expensive for users of other currencies.

International Brent crude oil futures rose 18 cents to $54.08 a barrel at 2:35 p.m. ET (1935 GMT), down 14 cents from their last close.

U.S. West Texas Intermediate (WTI) crude oil futures settled down 14 cents at $50.90 per barrel.

Oil outlook for 2017

Oil outlook for 2017   

“Brent tested the key $53 (a barrel) support level and now we’re seeing some buying because there is too much optimism as the market waits to see how some of OPEC’s supply cuts come through in the export data,” said Troy Vincent, an oil analyst at ClipperData in Louisville, Kentucky.

The Organization of the Petroleum Exporting Countries and other producers led by Russia have promised to cut production by almost 1.8 million barrels per day (bpd) in an attempt to clear a global oversupply that has depressed prices for more than two years.

National oil companies in Saudi Arabia, Kuwait and Abu Dhabi have told customers in Asia they would cut crude supplies following OPEC’s decision to cut output. Saudi Arabia also told U.S. and European customers it would reduce oil deliveries, and traders said other OPEC members are expected to do the same.

“These delivery cut announcements provide psychological support that OPEC will follow through with their planned output cuts,” ClipperData’s Vincent said.

ANZ bank said on Thursday oil markets would move into a substantial deficit in the first quarter of 2017 if OPEC and other producers reduced output as promised.

“This will likely push oil prices well above $60 per barrel early next year,” it said.

See oil in a range of $60-$80: John Hess

See oil in a range of $60-$80: John Hess   

Oil companies have slashed costs in order to survive the low price environment, industry data show.

“2017 will be the third year investments go down, with 3 percent (declines). You need to go back to the ’80s to see three consecutive years of investment cuts,” said Audun Martinsen, vice president for Oilfield Service Research at Rystad Energy.

Crude prices also received some support from falling U.S. crude inventories.

Data from the U.S. Energy Information Administration (EIA) showed that commercial crude inventories last week declined by 2.56 million barrels to 483.19 million barrels.

However, traders said it is far from clear whether OPEC and other producers will follow through with their announced cuts.

OPEC pumped 33.87 million bpd last month, according to figures it collects from secondary sources, up 150,000 bpd from October, OPEC said in a monthly report on Wednesday.

That shows the group’s output has continued to rise, adding to a global glut, ahead of the January start of its first supply cut agreement since 2008.

That could raise questions about its ability to comply fully with the deal.

US drillers pumped like crazy last week, and that’s a ‘major concern’ for OPEC

Oil outlook for 2017

Oil outlook for 2017   

Thanks, OPEC.

U.S. crude oil production surged by about 100,000 barrels a day last week, providing further evidence that American drillers are responding quickly to the higher prices that OPEC created by agreeing to curtail their own production.

The Organization of Petroleum Exporting Countries reached an agreement to cut production by 1.2 million barrels a day last month and got commitments from some nonmembers to 558,000 barrels a day in reductions this past weekend. Hopes for output limits had boosted prices ahead of the agreements.

American drillers were not among the nonmembers who agreed to cut. In the lower 48 states, they drove production to nearly 8.8 million barrels a day in the week through Dec. 9, according to the U.S. Energy Information Administration. That is up from about 8.7 million barrels a day the week prior.

To be sure, the weekly production figures are preliminary, and big jumps are not too rare. But a steadily rising four-week average for U.S. oil output points to an overall recovery. At 8.72 million barrels a day, the average was at its highest level since June.

Analysts warn that OPEC’s bid to balance an oversupplied market by cutting production could backfire if it causes oil prices to rise too much. Those higher prices could cause U.S. drillers sidelined by low oil prices to start pumping more oil.

The weekly jump in U.S. output is a “major concern” for OPEC members, said John Kilduff, founding partner at energy hedge fund Again Capital.

“This is exactly what several of them had been worried about. This deal gave new life to the shale industry,” he told CNBC. “OPEC’s going to have its hands full with them for a time.”

Recent hedging activity has allowed drillers to lock in prices for future deliveries of oil at $55 a barrel, a price that makes more of their acreage profitable, according to Kilduff, who has been bearish on oil prices and skeptical of OPEC’s ability to enforce production cuts.

The production surge follows an increase in the U.S. oil rig count of 21 rigs — the biggest one-week jump since a recovery in drilling activity began in June. Drillers have added a net 182 rigs since the count bottomed out at 316 rigs in May, according to data provided by oilfield services firm Baker Hughes.

The total U.S. rig count stood at 498 at last count, close the year-ago count of 524 rigs.

US Crude up 15 cents at $52.98

US crude ekes out another 17-month closing high, settles up 15 cents at $52.98 after producers confirm output cuts

CMBC

Oil prices surge on output freeze

Oil prices surge on output freeze   

Oil traded roughly flat on Tuesday, supported by strong demand in Asia and supply cuts by Abu Dhabi, Kuwait and Qatar as part of production curbs organized by OPEC and other exporters.

However, the market faced pressure as investors closed positions to take profits on strong gains the day before.

Traders said there was significant profit-taking after oil shot to mid-2015 highs earlier this week, boosted by the deal reached by the Organization of the Petroleum Exporting Countries and other exporters to cut output by a combined 1.8 million barrels per day.

Oil's rise a major head fake: Pro

Oil’s rise a major head fake: Pro   

Analysts said oil markets were still broadly supported by the arrangement to crimp output. In addition, the International Energy Agency said on Tuesday that it had raised its forecsat for global oil consumption, which will also help reduce the overhang of supply.

In its monthly oil market report, the IEA said revisions to its estimate of Chinese and Russian consumption had prompted it to raise its forecast for global oil market demand growth this year by 120,000 barrels per day to growth of 1.4 million bpd.

However, analysts said prices will turn fast if the market believed compliance was lacking.

“The following three to six months will provide us with an answer as to whether the foundation is strong enough to hold the building or will it collapse like a house of cards,” PVM analysts wrote.

In a sign that producers are acting on their plans to cut output, Abu Dhabi National Oil Company (ADNOC) told customers it would reduce Murban and Upper Zakum crude supplies by 5 percent and Das crude exports by 3 percent.

Oil producers are pragmatic: Expert

Oil producers are pragmatic: Expert   

Kuwait’s Petroleum Corporation (KPC) did similar, notifying its customers of a cut in their contractual crude oil supplies for January.

Meanwhile, China’s November crude output fell 9 percent on a year earlier to 3.915 million bpd , data showed on Tuesday, but recovered from October’s 3.78 million bpd, which was the lowest in more than seven years.

That came as China’s refinery throughput hit a daily record in November of 11.14 million bpd, up 3.4 percent year-on-year.

“Declines in Chinese … crude oil output and expansion of its strategic crude reserves underpin our view for China’s crude oil imports to strengthen over the coming quarters,” said BMI Research.

In India, Asia’s No.2 oil consumer behind China, fuel demand rose 12.1 percent in November compared with the same month last year, hitting 16.64 million tonnes (4.07 million bpd).

Crude Oil down 4%: Overall activity was thin after the U.S. Thanksgiving holiday

US crude settles down 4% at $46.06 on OPEC uncertainty

CNBC

Pump jacks in an oil field over the Monterey Shale formation near Lost Hills, Calif.

Getty Images
Pump jacks in an oil field over the Monterey Shale formation near Lost Hills, Calif.

Oil prices fell as much as 4 percent on Friday, dragged down by uncertainty over whether the Organization of the Petroleum Exporting Countries will reach an output deal.

Futures extended early losses after Saudi Arabia said it will not attend talks on Monday with non-OPEC producers to discuss supply cuts.

Brent crude oil futures were trading at $47.02, down $1.98, or 4 percent, by 1:35 p.m. ET (1835 GMT). U.S. West Texas Intermediate (WTI) crude futures settled down $1.90, or 4 percent, at $46.06 per barrel.

Overall activity was thin after the U.S. Thanksgiving holiday and ahead of the weekend.

 

Expect OPEC to reach a compromise: Strategist

Expect OPEC to reach a compromise: Strategist   

Top OPEC oil exporter Saudi Arabia has told the producer group it will not attend talks on Monday with non-OPEC producers to discuss limiting supply, OPEC sources said, as it wants to focus on having consensus within the organization first.

“I think Saudi’s announcement it would not to go to the meeting drove the initial sell-off,” said Tariq Zahir, managing member at Tyche Capital in New York. “There has to be a substantial cut and it has to be something that the street will believe.”

OPEC is due to meet on Nov. 30 to coordinate a cut, potentially with non-OPEC members like Russia, the world’s largest producer, but there is disagreement within the producer cartel as to which member states should cut and by how much.

Despite extensive diplomacy since September, the OPEC side of the deal still faces setbacks from Iraq’s call for it to be exempt and from Iran, which wants to increase supply because its output has been hit by sanctions.

 

One oil cut is not enough: Expert

One oil cut is not enough: Expert   

Reports that Saudi Aramco would in January increase oil supplies to some Asian customers also weighed on markets, traders said.

Saudi’s late push for more exports to Asia comes as Russia has stolen its place as top supplier to China, the world’s biggest crude importer and growth market despite a monthly drop in imports in October. This is a strong indicator that Riyadh’s policy to let prices slide in order to defend market share has not had the desired effect.

A decline in China’s October crude oil imports to their lowest on a daily basis since January added to the bearish tone.

Analysts said fundamentals were little changed — apart from concerns over the fate next week of the Saudi-led plan for the OPEC and other producers to agree on cuts in crude output. That deal would only impact supplies from February 2017 because most exporters sell their supplies two months ahead.

The market “is taking it easy ahead of a long weekend (in the United States) and uncertainty over OPEC,” said Bjarne Schieldrop, chief commodities analyst with SEB Bank in Oslo.

Krosby: Market needs new money to come in

Krosby: Market needs new money to come in   

Schieldrop said prices could rebound if the Nov. 30 meeting succeeded in reaching a targeted production cap of 32.5 million to 33 million barrels per day (bpd), from the 33.64 million bpd the group pumped in October.

On Thursday, the oil minister of non-OPEC nation Azerbaijan said OPEC was also pushing oil producers outside the group to make big cuts in output.

Most analysts expect some form of cut, but it is uncertain whether that would be enough to prop up a market dogged by oversupply since 2014.

“Oil market reaction will hinge on the credibility of the proposed action,” U.S. investment bank Jefferies said, adding that recent output increases to record levels in many countries now required a deep cut to lift prices significantly.

“The surge in OPEC output since August has shifted the market back into oversupply and re-balancing will be deferred until the second half of 2017 without a cut of at least 700,000 barrels per day.”

US crude settles up 3.9% at $47.49 ahead of OPEC decision on output

CNBC

Crude oil higher on hopes for OPEC production cut

Crude oil higher on hopes for OPEC production cut   

Oil prices rose more than 4 percent to a three-week high on Monday, bolstered by growing conviction that major oil producing countries would agree to limit output at a meeting next week.

Brent crude oil briefly touched $49 a barrel. The London benchmark has risen 11 percent in a week since Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, started a diplomatic charm offensive to persuade the group’s more reluctant members to join its proposed output plan.

In recent days, several OPEC members including Iran, along with non-member Russia, have suggested they were leaning toward a deal to limit output.

“When you’ve got all of the major players on board with a production cut, obviously you’re very close to getting a deal done,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.

“You never know with OPEC — sometimes they go to the last minute and there are a lot of false starts.”

Sunoco Logistics buys Energy Transfer Partners

Sunoco Logistics buys Energy Transfer Partners   

Brent crude oil futures were up $2.12, or 4.5 percent, at $48.98 a barrel by 2:28 p.m. ET (1928 GMT), having touched their highest level since Nov. 2, while U.S. West Texas Intermediate (WTI) crude were up $1.73, or 3.7 percent, at $47.42 a barrel.

The dollar eased off last week’s 13½-year highs as Treasury yields nudged lower, bolstering oil and the broader commodities complex including copper and gold.

Goldman Sachs analysts said in a note that chances of an OPEC cut succeeding have increased, and they believe the global oil surplus will shift into a deficit by the middle of next year, which would support prices.

“Our base case now is that an OPEC production cut will be announced and implemented,” they wrote. In late September, the brokerage said conditions were not optimal for a cut to work.

Russian Vladimir Putin said he saw no obstacle to non-OPEC member Russia agreeing to freeze oil output, which at more than 11 million barrels per day is at a post-Soviet high.

Meanwhile, OPEC members last week proposed a deal for Iran to cap, rather than cut, output.

Iran has been one of the main hurdles facing any output curtailment by OPEC, as Tehran wants exemptions to try to recapture market share lost under years of Western sanctions.

Libya and Nigeria, whose exports have been hampered by violence, have also asked to be left out of any deal. A recovery in production from both countries means the onus to cut rests on Saudi Arabia and its Gulf neighbors.

OPEC Meetings

OPEC needs a production ceiling: Analyst   

“While loose terms may be agreed, I remain skeptical that a full detailed agreement can be both achieved and carried out by OPEC given the clear differences that are so evident between certain key members,” OANDA markets strategist Craig Erlam said.

Barclays analysts said some form of deal was likely, but warned an agreement could have little impact.

“We expect OPEC to agree to a face-saving statement … (but) U.S. tight oil producers can grow production at $50-$55 (per barrel) and will capitalize on any opportunity afforded to them by an OPEC cut,” the bank said.

Hedge funds raised their net holdings of U.S. crude futures and options for the first time in three weeks in the week to Nov. 15, having delivered one of the largest cuts on record the previous week. The move highlights the nervousness among investors about betting heavily on oil in either direction.