Crude oil tumbles nearly 7% as pressure builds on OPEC to cut output

Crude-oil prices plunged in early Friday trade in New York, with the contract headed for its seventh-straight weekly fall as investors increasingly focused on a coming OPEC meeting. January West Texas Intermediate crude slid $3.73, or 6.8% to $50.90 a barrel. The contract rose nearly 2.3% on Wednesday, after losing 6.6% Tuesday to settle at a more than one-year low of $53.43. For the week so far, WTI is down 7.8 per cent. Global benchmark January Brent slid $2.95, or 4.7 per cent, to $59.65 a barrel, after closing up 1.5 per cent on Wednesday. Its finish at $62.53 Tuesday was the lowest settlement since February.

“Oil remains under pressure despite noises from some OPEC countries, most notably Saudi Arabia, about another possible coordinated production cut at the next meeting in two weeks. I do wonder how much lower traders will push it given how likely it is that members will follow through on these threats,” said Craig Erlam, senior market analyst at OANDA, in a note to clients. Saudi Arabia’s Energy Minister al-Falih asserted yesterday that his country doesn’t intend to flood the market with oil. This points to a possible reversal of the latest production increase, which was undertaken in anticipation of the U.S. sanctions against Iran,” said Commerzbank analysts.

Observers said investors were also looking at a report this week that showed record Saudi Arabia oil production of near 11 million barrels a day, as customers tried to prepare for a disruption in Iran supplies. And data this week showed a 4.9 million-barrel rise in U.S. crude oil stocks reported Wednesday. The Energy Information Administration reported that domestic crude supplies rose for a ninth straight week, well above the 1.9 million-barrels that had been expected by analysts surveyed by The Wall Street Journal.

MarketWatch