Oil price falling again as doubts grow over Opec production cut

Brent crude futures LCOc1 were trading at $46.40 per barrel at 0035 GMT (7.35 a.m. ET), down 84 cents, or 1.8 percent, from their last close, while U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 74 cents, or 1.6 percent, at $45.32 a barrel.

OPEC watcher Amrita Sen from Energy Aspects said OPEC had proved to the sceptics that it was not dead.

A production cut could have a lasting impact on consumers as oil price increases feed into the cost of auto fuel, heating and electricity.

Moors said that the other roadblock for the OPEC deal today is Iraq and Iran did not attend a meeting of Persian Gulf and other OPEC oil officials in Doha on November 17 and November 18. “I think the sentiment generally is optimistic and positive”.

Ahead of the meeting, Saudi Energy Minister Khalid al-Falih-whose country is OPEC’s largest producer-said that if the cartel were able to reach an agreement, it would reach out to non-OPEC oil producers to try to secure their cooperation in limiting global production.

The deal being brokered aims to cut 1.2 million bpd from October levels. Its Gulf OPEC allies – the United Arab Emirates, Kuwait and Qatar – would cut by a total 0.3 million bpd.

“Firstly, this remains a growth business, with oil demand in OPEC’s 2016 World Oil Outlook reaching over 109 million barrels of oil a day by 2040, a healthy increase of over 16 million barrels a day”.

The agreement is contingent on non-OPEC members agreeing to cut their own output by 600,000 per day, he added.

Clashes between Saudi Arabia and Iran dominated many previous OPEC meetings.

In June of 2014, oil traded at over $100 a barrel.

Falih had long insisted OPEC would do an output-limiting deal only if non-OPEC producers contributed. Bloomberg News reports that an unnamed “delegate to the group” confirmed output will be cut be 1.2 million barrels per day to 32.5 million per day.

However, concerns remain that reducing output will lead to non-Opec oil producers taking a greater share of the market.

The OPEC countries have yet to finalize the deal at the November 30 meeting in Vienna with non-OPEC states, including Russian Federation, open to capping the output.

An OPEC source told Reuters on Wednesday that the cartel had firmed up an agreement in line with a tentative deal reached in Algiers in September. Even without a deal, he said there are signs the market situation was returning to balance.

Al-Sada said major non-OPEC producers were ready to act in concert by tentatively planning to reduce their output.