Oil dropped a second day on speculation the OPEC agreement to trim crude output won’t succeed in reducing supply.
Futures fell as much as 1.8 percent in New York. Crude has climbed since the Organization of Petroleum Exporting Countries agreed on Sept. 28 to have a
new output range of 32.5 million to 33 million barrels a day. OPEC Secretary-General Mohammed Barkindo said Wednesday that talks with Russia about output curbs have been “very constructive.” Oil declines accelerated as the dollar rose to the highest in more than two months against its peers, curbing the appeal of commodities to investors.
Oil closed at a 15-month high Monday after Saudi Arabia expressed optimism that a deal could be finalized to cut output and Russia signaled support. While Saudi Arabia’s oil minister left Istanbul before a producer meeting Wednesday, Barkindo said most of the work on an accord was already done and countries including Russia, Azerbaijan, Algeria and Venezuela will still meet to “compare notes.” OPEC supply quotas will be decided at the group’s official gathering late next month in Vienna.
“We pushed solidly above $50 on the OPEC agreement and are now refocusing on whether they will actually follow through with actual cuts,” said Gene McGillian, a senior analyst and broker at Tradition Energy in Stamford, Connecticut. “Any gains will be tempered until there’s evidence they are honoring their production cuts. We need to see signs that the fundamental picture is falling before making new highs.”
West Texas Intermediate for November delivery fell 79 cents, or 1.6 percent, to $50 a barrel at 11:31 a.m. on the New York Mercantile Exchange. On Monday, the contract advanced 3.1 percent to $53.14 a barrel, the highest close since July 15, 2015. Total volume traded was 6.3 percent above the 100-day average.
Brent for December settlement dropped 69 cents, or 1.3 percent, to $51.72 a barrel on the London-based ICE Futures Europe exchange. The global benchmark was at a $1.23 premium to December WTI.