Oil extended its decline below $45 a barrel as focus shifted to OPEC’s ability to stabilize prices after markets were roiled this week by Donald Trump’s largely unexpected U.S. presidential election win.
Futures fell as much as 0.7 percent in New York, trimming the first weekly advance in three weeks. Prices may retreat amid “ relentless global supply growth” unless the Organization of Petroleum Exporting Countries enacts significant output cuts, the International Energy Agency said Thursday. The dollar is poised for the biggest weekly gain since May 2015. A stronger U.S. currency reduces the appeal of commodities priced in the dollar.
Oil has slipped below $45 a barrel following OPEC’s failure last month to agree on output quotas for member countries. Targets must be agreed upon before the group’s deal to cut production can be finalized at a meeting on Nov. 30. While investors took comfort from Trump’s conciliatory speech on Wednesday, rising U.S. crude supplies served as a reminder of the inventory overhang.
“The focus is now on OPEC,” said Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney. “The Trump factor is over, it’s about supply and demand now. The lower oil slips, the more pressure there is for a deal to be done.”
West Texas Intermediate for December delivery slid as much as 32 cents to $44.34 a barrel on the New York Mercantile Exchange, and was at $44.42 at 3:15 p.m. Hong Kong time. The contract lost 61 cents, or 1.4 percent, to $44.66 on Thursday. Total volume traded was about 31 percent below the 100-day average. Prices are up 0.8 percent this week.
Brent for January settlement lost as much as 27 cents, or 0.6 percent to $45.57 a barrel on the London-based ICE Futures Europe exchange. The contract fell 52 cents to $45.84 on Thursday. Prices are 0.2 percent higher this week. The global benchmark traded at a premium of 52 cents to January WTI.
See also: IEA waiting to see if Trump’s Iran rhetoric hardens into action
Non-OPEC producers such as Brazil, Canada, Kazakhstan and Russia will raise output by 500,000 barrels a day in 2017, after enduring their biggest slump in more than two decades, the IEA said in a report. OPEC meets in Vienna at the end of the month as Iraq seeks to be excluded from cuts because it’s embroiled in a war with Islamic militants.
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, is poised for the biggest weekly gain in almost a year-and-a-half on speculation Trump’s fiscal-stimulus proposals will boost inflation.
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