SINGAPORE: Oil prices fell on Wednesday on doubts OPEC and Russia will agree on extending a crude production cut to cover all of 2018, and after a report of an unexpected rise in US crude oil inventories.
US West Texas Intermediate (WTI) crude futures were at $57.81 a barrel at 0722 GMT, down 18 cents, or 0.3 percent below their last settlement.
Traders said WTI was pulled lower by a report from the American Petroleum Institute (API) late on Tuesday that showed US crude inventories rose by 1.8 million barrels in the week ended Nov. 24 to 457.3 million barrels.
Official US oil inventory data is due later on Wednesday.
WTI was also weighed down by the gradual restart on Tuesday of the Keystone pipeline, which supplies Canadian crude to the United States.
Brent crude futures were at $63.36 a barrel, down 25 cents, or 0.4 percent.
Oil prices have received a broad lift this year, with Brent up by 40 percent since mid-2017, due to an effort by the Organization of the Petroleum Exporting Countries (OPEC) and a group of other producers, led by Russia, to withhold 1.8 million barrels per day (bpd) of output.
The deal expires in March 2018, but OPEC will meet on Nov. 30 and is expected to discuss ways of extending the cut.
While OPEC and Russia are expected to extend their supply cuts for the whole of 2018, they are likely to include an option to review the deal in June, OPEC sources said on Tuesday, after Moscow expressed concerns the market could overheat.
“They plan to extend for 2018 but with the option to review the decision in June, i.e. they agree not to agree anything,” said Ralph Leszczynski, head of research at shipping brokerage Bancosta in Singapore.
Many analysts say an extension is needed to balance oil markets, and also to keep the economies of oil exporting nations afloat. Yet not all analysts agree.
“Given the agreement doesn’t expire for another four months, adding an additional nine months on that to the end of 2018 seems unnecessarily eager given the market does seem to be rebalancing,” said Greg McKenna, chief market strategist at AxiTrader.
Beyond cutting supplies, a healthy global economy has been helping oil markets back into balance after years of oversupply.
US bank Morgan Stanley said global economic growth was “likely to gain momentum and breadth in 2018.”
With demand healthy and many producers profitable at current prices, hedging activity has picked up, energy consultancy Wood Mackenzie said.
“Hedging activity surged in Q3 2017 as oil producers rushed to lock in rising prices for future production ... 33 of the largest upstream companies with active hedging programs ... added 897,000 bpd (annualized) of new oil hedges during Q3 2017, up 147 percent from Q2 2017,” Wood Mackenzie said.
Oil falls on uncertainty of extended output cuts, surprise rise in US crude stocks
Oil falls on uncertainty of extended output cuts, surprise rise in US crude stocks
Free trade negotiations between GCC, India mark new phase of partnership, says sec-gen
RIYADH: The Gulf Cooperation Council’s secretary-general affirmed that the negotiations for a free trade agreement between the GCC and India, and the signing of the joint statement, represents a new phase of strategic partnership.
Jasem Mohamed Al-Budaiwi said that this contributes to enhancing close cooperation and strengthening economic and trade ties, according to the Saudi Press Agency.
This came during the signing ceremony of the joint statement on launching the free trade agreement negotiations between the Al-Budaiwi and India’s Minister of Commerce and Industry, Piyush Goyal, which took place in New Delhi, on Tuesday.
During the signing ceremony, Al-Budaiwi said that the Terms of Reference, signed on Feb. 5, provide a comprehensive and clear framework for these negotiations. The two nations agreed to discuss enhancing cooperation in vital strategic areas, including trade in goods, customs procedures, and services.
Additionally, the framework covers Sanitary and Phytosanitary measures, intellectual property rights, cooperation on Micro, Small, and Medium Enterprises, along with other topics of mutual interest. This reflects the comprehensive nature of the agreement and its ability to keep pace with the future economy.
Al-Budaiwi expressed hope that these negotiations would lead to a comprehensive and ambitious free trade agreement that works to remove customs and non-customs barriers, enhance the flow of quality investments in both directions, and achieve further liberalization in trade and investment cooperation between the GCC and India for mutual benefit.
This would provide a stimulating economic environment and an investment climate that opens broad horizons for the business sector, supports supply chains, and accelerates the pace of economic growth in line with the ambitious developmental visions of the GCC states.
The top official affirmed the full readiness of the General Secretariat to host the first round of negotiations at its headquarters in Riyadh during the second half of this year.
The two sides held a meeting during which they reviewed the existing cooperation relations between the GCC and India and discussed ways to develop and elevate them to broader horizons, serving mutual interests and enhancing opportunities for strategic partnership between the two sides, particularly in the economic, investment, and trade fields.
They praised the role undertaken by the negotiating teams from both sides, appreciating the efforts contributing to reaching a comprehensive agreement that enhances economic integration and supports the smooth flow of trade between the two nations.
