Internal squabbling torpedoes progress on OPEC production cuts deal

Brent for January settlement was up 30 cents at $48.91 a barrel on the London-based ICE Futures Europe exchange. The burden of proof is now on the Bulls, and we’ll continue to doubt their arguments if the price of Oil to fails surpass $50-51/bbl before anticipating new 15-month highs anytime soon.

Oil prices fell 2.1% to $48.70 a barrel on Friday as a divided OPEC failed to agree on specific cuts for members.

Rising October OPEC production and a faster ramp up of new non-OPEC projects have reduced the odds that an agreement translates into a decent draw in inventories during the first half of 2017, it said, estimating average OPEC output at about 34.2 million barrels a day last month.

Crude prices are likely to remain under pressure in the short term until more of the record net long positions have been liquidated, or until OPEC can provide convincing details of how the output agreement will work.

Officials from OPEC countries and non-OPEC producers including Azerbaijan, Brazil, Kazakhstan, Mexico, Oman and Russian Federation met on 29 October at OPEC headquarters in Vienna.

Prices began falling again as more OPEC members said they were unwilling or unable to cut production, casting doubt on what the group will do when it meets on November 30 in Vienna.

Commentators have seized on the slow progress towards reaching a detailed plan allocating output cuts between OPEC and non-OPEC members to explain the fall in prices.

“Investor skepticism to a supply deal is building”, said David Lennox, a resources analyst at Fat Prophets in Sydney. It traded as low as $48.51 earlier, after losing almost 3 percent the day before in the biggest one-day drop since September 23.

But Iraq showed its displeasure at the deal all the way back in late September, when it began to question the method in which OPEC calculated production figures-production figures that would be used to determine who would cut what. Now, Saudis are ready to OPEC’s setting a ceiling on oil output somewhere between 32.5 million and 33 million barrels per day – down from current levels of 33.5 million barrels per day.

Disputes between Opec members over how to share out planned oil output cuts have prevented the cartel agreeing curbs with other major producers.

“Yes, finally”, another source said, adding that only few changes had been made and that unlike in previous meetings when Saudi Arabia clashed with Iran, on Monday Riyadh managed to convince other countries without much of a struggle. As it has no time for a bargain before a total collapse, the country’s President Nicolas Maduro has been touring the oil-producing nations to raise support for a deal to boost prices by cutting output.