Ejiofor Alike with agency reports
Oil prices dropped more than $1 a barrel monday to hit one-month low on doubts about the Organisation of Petroleum Exporting Countries (OPEC)’s planned production cut and a build in US crude inventories at the Cushing, Oklahoma storage hub.
The drop in crude prices followed signs of deadlock at a technical OPEC meeting in Vienna as the producer group battled to work out an implementation framework to seal a deal agreed in September to reduce the volume of inventory in the international market.
A meeting with non-OPEC producers including Brazil and Russia also appeared to have ended in deadlock as officials from the cartel and non-member producers met in Vienna on Saturday, but did not come to specific terms.
They agreed only to meet again before a scheduled regular OPEC meeting on November 30.
Reuters reported that on Friday, talks in Vienna between OPEC members sputtered following objections from Iran, which has been reluctant to even freeze its output, sources said.
Global benchmark, Brent was monday down $1.50 at $48.20 a barrel after hitting $48.17, its lowest since September 29.
The more active next-month Brent contracts were down $1.39 at $49.29 a barrel.
US West Texas Intermediate futures were trading down $1.31 at $47.39 a barrel after falling to $47.36, the lowest since September 30.
Compounding the bearish sentiment was data from energy monitoring service Genscape, cited by traders, which showed a build of 585,217 barrels of crude at the storage hub and delivery point for WTI futures in Cushing in the week to October 28.
Global oil prices have risen by as much as 13 per cent, encouraging a recovery in the industry after OPEC announced on September 27 a production cut to boost prices after a slump that began mid-2014.
But General Electric Co, which announced monday that it would merge its oil-and-gas business with Baker Hughes Inc, said the move assumes a “slow” oil price recovery.
A representative for oil transport company Euronav NV said monday it is unlikely that OPEC will push up prices due to Iran and Iraq, which has also resisted cuts.
OPEC had not specified how much each individual member should cut, saying that will be finalised at the November 30 meeting.
Non-member Russia had agreed to talks to cooperate, but a draft federal budget showed it expects to increase its output by 0.7 per cent next year and 0.9 percent in 2018.