London: Oil retreated from a 16-month high after Opec pumped a record amount of crude in November.
Futures slid as much as 2.9 per cent in New York after rising 15 per cent over the previous four sessions. Opec boosted production to 34.16 million barrels a day last month, according to a Bloomberg News survey, with Angola, Libya and Nigeria leading the gains. Attention is shifting to which non-Opec producers will join Russia in reducing output when they meet in Vienna on Saturday. Opec is hoping they will cut a further 300,000 barrels a day
Oil topped $50 a barrel after the Organisation of Petroleum Exporting Countries agreed Wednesday to trim the group’s output by 1.2 million barrels a day from January to stem a supply glut and buoy prices. Russia — which isn’t part of the bloc — has also pledged a reduction of as much as 300,000 barrels.
“There are two things moving us lower, the first being the rise in Opec production,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. “There’s also scepticism about the meeting next weekend. They are going to be hard pressed to squeeze 300,000 barrels from this crew.”
West Texas Intermediate for January delivery dropped $1.44, or 2.8 per cent, to $50.35 a barrel at 9:38am on the New York Mercantile Exchange. The contract rose 0.2 per cent to $51.79 on Monday, the highest close since July 2015. Total volume traded was about 35 per cent above the 100-day average.
Brent for February settlement fell $1.40, or 2.6 per cent, to $53.54 a barrel on the London-based ICE Futures Europe exchange. Futures climbed 0.9 per cent to $54.94 on Monday, also the highest close since July 2015. The global benchmark crude traded at a $2.07 premium to February WTI.
