Oil retreated from the highest close in 16 months as OPEC prepares to meet producers from outside of the group on Saturday to widen cooperation with supply curbs.
Futures slid as much as 1.7 percent in New York after advancing 15 percent over the previous four sessions. The Organization of Petroleum Exporting Countries has invited 14 producers including Mexico and Kazakhstan to the talks in Vienna, Secretary-General Mohammad Barkindo said Monday. U.S. crude stockpiles probably slipped for a third week, according to a Bloomberg survey before Energy Information Administration data Wednesday.
Oil has been trading above $51 a barrel after OPEC agreed Wednesday to trim the group’s output by 1.2 million barrels a day by January, while Russia pledged a reduction of as much as 300,000 barrels. Attention is now shifting to how much of the group’s first supply cut in eight years will be adhered to after OPEC pumped a record amount of crude in November.
“The market will be looking for any increased activity from the U.S. in the weeks ahead and that’s what will probably keep the lid on any sustainable rally,” said David Lennox, a resources analyst at Fat Prophets in Sydney. “OPEC has cleared the first hurdle by agreeing to cuts, the next hurdle is whether they can stick to those cuts. Compliance is now the focus.”
West Texas Intermediate for January delivery lost as much as 87 cents to $50.92 a barrel on the New York Mercantile Exchange, and was at $51.46 at 7:50 a.m. in London. The contract rose 0.2 percent to $51.79 on Monday, the highest close since July 2015. Total volume traded was about 14 percent below the 100-day average.
Brent for February settlement lost as much as 50 cents, or 0.9 percent, to $54.44 a barrel on the London-based ICE Futures Europe exchange. The contract on Monday gained 48 cents to $54.94, also the highest close since July 2015. The global benchmark crude traded at a $2.17 premium to February WTI.
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Other invitees to the meeting on Saturday include Oman, Bahrain, Colombia, Egypt, Trinidad and Tobago, Turkmenistan, Azerbaijan and Brunei. Altogether, the 14 nations pumped about 18.8 million barrels a day of oil last year, equivalent to 20 percent of global supply, according to data from BP Plc.
U.S. crude inventories probably dropped by 1.5 million barrels last week, according to the median estimate in a Bloomberg survey before EIA data. OPEC pumped 34.16 million barrels a day last month, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. That’s up from a revised 33.96 million barrels a day in October. Saudi Arabia cut pricing for January oil sales to Asia, according to an e-mailed statement from state-owned Saudi Arabian Oil Co.