Sun, Dec 02, 2018 - Page 14 News List

Oil posts worst loss in 10 years on supply glut woes


Oil closed out its worst month since the global financial crisis a decade ago as all eyes turned to this weekend’s G20 summit for signs that Saudi Arabia and Russia can head off a worldwide supply glut.

Crude futures made up some ground on Friday after an OPEC advisory committee recommended a 1.3 million-barrel cut to the cartel’s daily output.

Still, prices finished down 22 percent last month, the deepest slide since October 2008.

That capped a volatile month beset by worries about booming production and the impact of international trade tensions.

Investors are focused on the G20 summit in Argentina, where leaders from the US, Russia and Saudi Arabia — the world’s three biggest oil producers — have gathered in a prelude to a key OPEC meeting next week in Vienna.

Russian Minister of Energy Alexander Novak earlier on Friday said that he was comfortable with prices where they currently are, adding to uncertainty about what top oil exporters can agree on.

“You’re going to have a ballet and concert of various statements that are either contradictory or reinforcing leading up to the OPEC meeting,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London. “It’s the kind of to-and-fro that creates volatility because people’s expectations can’t be anchored.”

West Texas Intermediate (WTI) for January delivery fell US$0.52, or 1 percent, to US$50.93 a barrel on the New York Mercantile Exchange on Friday. The contract was little changed from last week’s US$50.42 per barrel.

Brent crude for February settlement dropped US$0.45 to US$59.46 on London’s ICE Futures Europe exchange. The contract rose 1.1 percent from last week.

The January contract for the global benchmark, which expired on Friday, traded at a US$7.78 premium to WTI for the same month.

Russian and Saudi officials were scheduled to meet in Moscow over the weekend, signaling that an agreement on production cuts is possible if talks between Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman go well in Argentina, according to people briefed on the discussions.

“As things stand, the Russians and Saudis are still far from being on the same page over the finer details of looming output restrictions,” Stephen Brennock, an analyst at PVM Oil Associates in London, wrote in a report. “Against this backdrop, the most likely outcome of next week’s OPEC meeting is a fudge.”

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