Oil prices fall over 1% on pre-OPEC decision volatility

Randall Padilla
December 1, 2017

Oil futures ended lower Wednesday, for a third-consecutive session, as growing uncertainty over the outcome of a closely watched OPEC meeting outweighed support from official USA data revealing a decline in domestic crude stockpiles for a second week in a row.

Most of the adjustments came from the long side of the market, where portfolio managers reduced the number of long positions in Brent, WTI and gasoline in a sign of profit-taking after a strong price rally.

Brent crude futures were up 35 cents on the day at $63.96 USA a barrel late morning Wednesday, while US light crude rose 23 cents to $58.22 US a barrel.

Brent crude futures, on delivery contract for January 2018, dropped 1.16%, or 74 cents, to $62.87 a barrel at 1:24 p.m. EST.

The producers are expected to extend a production-cap agreement due to end in March, but the length of the extension has been a key question.

Oil prices fall over 1% on pre-OPEC decision volatility
Oil prices fall over 1% on pre-OPEC decision volatility

The American Petroleum Institute (API) reported on November 28 that the volume of oil reserves in the USA increased by 1.8 million barrels, distillates - by 2.7 million barrels. That was a bit higher than the forecast for a decline of 3 million barrels from analysts surveyed by S&P Global Platts. The American Petroleum Institute on Tuesday (http://www.marketwatch.com/story/oil-prices-fall-as-sources-say-api-data-show-a-weekly-rise-in-us-crude-supplies-2017-11-28) had reported an increase of 1.8 million barrels, according to sources.

OPEC members made a decision to cut production by 1.2 million barrels per day.

Analysts on average forecast a decrease in oil reserves by 3 million barrels, as well as an increase in distillate stocks by only 160,000 barrels.

Failure to extend the agreement for the full nine months could therefore spark a sharp correction, but pressing ahead will fuel concerns about the market tightening too much by the end of 2018. Refinery utilization rates rose by 1.3 percentage points.

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