Published: Fri, November 30, 2018
Money | By Ralph Mccoy

Crude Market: Oil dips below $50 on output doubts

Crude Market: Oil dips below $50 on output doubts

US West Texas Intermediate (WTI) crude futures were at $51.30 per barrel at 0023 GMT, down 15 cents, or 0.3 percent from their last settlement.

Coming into Thursday's session, crude oil was in a position to set one of its biggest one-month declines in November since the worst of the financial crisis in 2008, having dropped about 22 percent so far. Brent crude slid early to another 2018 low below $58 a barrel.

Oil briefly plunged below $50 on Thursday amid fears of an emerging supply glut, before reversing course after Reuters, citing unnamed industry sources, reported that Russian Federation is considering cutting its oil output along with other members of the Oil and Petroleum Producing Countries (OPEC).

OPEC and its partners, including Russian Federation, are scheduled to meet in Vienna next week to decide on production targets.

The biggest snag in OPEC's push for a consensus on cutting oil output could come from relentless growth in supply from its second-biggest producer, Iraq. Just days before talks on oil policy with Saudi Arabia, Russian President Vladimir Putin said current prices are " absolutely fine", while Saudi energy minister said the kingdom is confident OPEC and its partners can reach a deal to stabilize the market.

US crude stockpiles rose last week, the American Petroleum Institute (API) industry group said on Tuesday.

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The market now expects that a cut of 1 million barrels per day would be possible from OPEC and its allies, said John Kilduff, partner at Again Capital in NY. Another meeting with Russian oil companies was held on Tuesday. The dollar index (.DXY) edged higher against a basket of currencies, pressuring prices of dollar-denominated oil.

European oil benchmark Brent stood at just under $60 on Wednesday, while its United States counterpart WTI hovered just above $51.

While Putin praised Saudi Crown Prince Mohammed Bin Salman and said Moscow is ready to cooperate further, he said crude around $60 a barrel is "balanced and fair" and well above the level needed to to keep his government's budget in surplus.

The API said that US crude stocks rose by 3.5 million barrels, more than analysts forecast.

Investors are looking ahead to the meeting of leaders of the Group of 20 nations (G20), the world's biggest economies, on November 30 and December 1, with the U.S. "However, we might see some movement on global trade issues at the G20 meeting which starts on Friday", said Michael McCarthy, chief strategist at CMC Markets and Stockbroking. While oversupply concerns were fueled by American exemptions on sanctioned Iranian oil, a trade dispute between the US and China has threatened to hurt demand.

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