Oil markets struggle as cracks in OPEC form

By Henning Gloystein

* Extended OPEC-led production cuts are priced in -traders

* But doubts over Russia’s willingness to extend cuts emerge

* API reports surprise climb in U.S. crude inventories

* But healthy world economy should support oil demand

SINGAPORE, Nov 29 (Reuters) – Oil prices fell on Wednesday on doubts OPEC and Russia will agree an extended crude production cut that the market has priced in, and after a report of an unexpected rise in U.S. fuel inventories.

Traders said WTI was pulled down by a report from the American Petroleum Institute (API) late on Tuesday which showed U.S. crude inventories rose by 1.8 million barrels in the week to Nov. 24 to 457.3 million barrels.

Official U.S. fuel inventory data is due later on Wednesday.

Brent crude futures, the international benchmark for oil prices, were at $63.27 a barrel, down 34 cents, or 0.5 percent.

Oil prices have received a broad push 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 to discuss its policy.

“Market whispers suggest Saudi Arabia and Russia are not yet fully coordinated,” said Stephen Innes, head of Asia-Pacific trading at futures brokerage OANDA.

OPEC and Russia are expected to extend their supply cuts for the whole of 2018 but with an option to review the deal in June, OPEC sources said on Tuesday, after Moscow expressed concerns the market could overheat.

Reuters

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes