Oil Prices Hold Above $50 Per Barrel Pre-Bell

Posted October 27, 2016

Oil prices fell on Wednesday, pulled down by a report of surging USA crude inventories, rising output in Nigeria and squabbling among producers about a planned output cut, which together re-ignited concerns over a global supply glut.

United States crude stockpiles fell by 553,000 barrels last week, the Energy Information Administration said, a result contrary to the 1.7 million-barrel build that analysts polled by Reuters had forecast.

OPEC is trying to woo other producers to join in the group's first output cuts in eight years, a policy shift members agreed to last month in Algiers.

However, details on how much each member state will cut from its production will only be known during OPEC's next meeting in Vienna on November 30. Traders sometimes ignore the region when assessing the USA supply balance as its distribution system is isolated from the rest of the country.

West Texas Intermediate for December delivery was at $50.51 a barrel on the New York Mercantile Exchange, down 1 cent, at 1.28pm in Hong Kong.

Producers' verbal jockeying about the Organization of the Petroleum Exporting Countries' (OPEC) planned output cut weighed further on the market, analysts said, noting Iraq's resistance to the plan and its rising output for October.

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Analysts said that oil would trade in a range ahead of crude oil inventory data from the American Petroleum Institute, due at 2030 GMT, followed by official Energy Information Administration data on Wednesday. After the API report, it fell as much as $1.25, or 2.5 percent, to $49.27.

The dollar hit a nine-month peak overnight against a basket of currencies .DXY , underpinned by expectations US rates will rise by the year-end, making commodities priced in the greenback expensive for holders of other currencies.

OPEC's oil ministers said output would fall by around 700,000 barrels per day.

Unless non-OPEC member Russian Federation participates in the effort, Arab producers in the Middle East such as Saudi Arabia, Kuwait and the UAE, will be responsible to decide on the potential cut.

The possibility that producers could walk away empty-handed from the upcoming meeting looms large after Iraq, Iran, Nigeria and Libya all signaled they might not take part in the proposed production cut deal.

Last month, OPEC said it will cap output at 32.5 million-33 million barrels per day to help rebalance oil markets.