Crude Oil Slips To Mid-Sept. Lows

Crude prices have been in retreat for weeks now in the lead-up to the November 30 OPEC meeting, as doubts have intensified over the cartel’s ability to strike a deal. Members’ total output is still growing as Libya and Nigeria recover from violence that halted production. Prices were on track for their biggest daily percentage gain since September 28.

The details are meant to be finalised when Opec ministers meet in Vienna on Nov 30.

A bearish tone was set after the market closed on Tuesday, when the USA industry group, the American Petroleum Institute, said crude stocks rose last week.

“These oil producers have reconstructed their business so they can make money at these low oil price levels”.

The S&P 500 traded higher, led by recent decliners including Apple, Facebook and Alphabet.

Iran told OPEC it produced 3.92-M BPD of Crude Oil in October, while the secondary sources put output at 3.69-M BPD.

Hedge fund manager Pierre Andurand says OPEC is still likely to agree on an output freeze this month and prompt a sharp rally in oil prices, despite disputes among its members. However, even despite the decision to cap their production in order to stabilize and support the worldwide oil market, they do not expect the prices to start rallying this year. “There is doubtless considerable pressure to take action, as the oversupply will not reduce itself”. U.S. unconventional shale oil production is expected to dip 13 percent this year from 2015 levels and continue to slip into 2017 before rebounding 11 percent in 2018, according to data from the U.S. Energy Information Administration.

“Today’s price recovery that has seen Brent climb back to above $45 per barrel comes courtesy of the latest diplomatic attempts by Qatar, Venezuela and Algeria to bring about a compromise at the OPEC meeting”, said Commerzbank. So far, the potential deal hasn’t materialised and it appears that it’d take exceptional circumstances to bring the world’s huge oil-producing interests onto the same page. Those headlines have driven oil prices lower, momentum has been down, but the headlines are not the whole story, and under shoots are arguably taking place. Even under those circumstances, however, USA shale oil production would continue to present a ceiling to the lowest floor.

A freeze or cut in OPEC and Russia’s production could be short-lived due to a quick recovery in USA shale oil production.

OPEC members need to stop bickering over output curbs or risk the group becoming irrelevant to global oil markets, according to an analyst who predicted the biggest price crash in a generation.