Oil Keeps Dropping on Questionable Fate of OPEC Production Cut

Oil fell more than 2 percent to its lowest in three months on Monday, as the prospect of another year of oversupply and weak prices overshadowed chances OPEC will reach a deal to cut output.

Donald Trump’s surprise win in last week’s U.S. presidential election boosted the dollar and stocks but undermined oil. Crude has also fallen because of waning expectations that the world’s largest exporters will agree to reduce production this month.

Brent LCOc1 fell $1.11, or 2.5 percent, to $43.64 a barrel by 11:32 a.m. EST. U.S. crude CLc1 fell $1.12, or 2.6 percent, to $42.29 per barrel. Both contracts were down for a third day in a row to their lowest levels since Aug. 11.

The Organization of the Petroleum Exporting Countries plans to cut or freeze output, but some analysts doubt the group’s ability to reach an agreement at its meeting on Nov. 30.

“Complex seeing further downside pressures amidst increasingly bearish balances, U.S. dollar strength and lack of OPEC confidence,” Jim Ritterbusch, president of Chicago-based energy advisory Ritterbusch & Associates, said in a note.

OPEC said on Friday its output hit a record 33.64 million barrels per day in October, and forecast an even larger global surplus in 2017 than the International Energy Agency on Thursday. [IEA/M]

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza