Oil falls on output cut skepticism, OPEC and Russia output rise

Tue Dec 6, 2016 5:16pm EST
 
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By Scott DiSavino

NEW YORK (Reuters) - Oil prices on Tuesday ended lower for the first time since OPEC agreed on Nov. 30 to cut output, as data showing record high production in the producer group fed skepticism that it would be able to reduce supplies.

Brent futures slid $1.01 to settle at $53.93 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 86 cents to $50.93 per barrel. Crude had surged more than 15 percent in the four sessions since the Nov. 30 OPEC meeting.

"Prices fell for the first day in five in reaction to news that OPEC's output hit a record high last month," said James Williams, president of energy consultant WTRG Economics in Arkansas.

OPEC's output set another record high in November, rising to 34.19 million barrels per day (bpd) from 33.82 million bpd in October, according to a Reuters survey.

Oil prices pared losses slightly after inventory data released late Tuesday from the American Petroleum Institute showed U.S. crude stocks dropped more than expected last week despite a hefty build of 4 million barrels in Cushing, Oklahoma. [API/S]

If the Cushing build is reinforced in Wednesday's report from the U.S. Energy Information Administration, that would signal the largest weekly rise since January 2009, data showed.

As part of last week's decision, OPEC said major oil producers outside the group would cut 600,000 bpd of production on top of OPEC's 1.2 million bpd reduction. Those countries and OPEC meet this weekend to finalize the terms.

Russia reported average oil production in November of 11.21 million bpd, its highest in nearly 30 years. That means OPEC and Russia alone produced enough to cover almost half of global oil demand, which is just above 95 million bpd.   Continued...

 
Rigging equipment is pictured in a field outside of Sweetwater, Texas June 4, 2015. REUTERS/Cooper Neill