Oil dropped after an OPEC-led coalition of major crude producers left the door open to dropping supply cuts halfway through 2018.
Futures fell as much as 0.8 percent in New York. The Organization of Petroleum Exporting Countries on Thursday ratified a long-awaited extension of output caps for a second year and were urging Russia and other major producers to do the same. Enthusiasm was muted among traders because the cartel plans to re-evaluate the accord at OPEC’s June gathering.
“It’s not a clean nine-month extension, so that’s going to hurt their efforts, at least price-wise in the short-term,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said in a telephone interview. “It appears they are going to revisit everything here in June.”
OPEC has “come a long way” toward eroding a worldwide oil glut, Saudi Arabia’s Energy Minister Khalid Al-Falih said before start of the producer meeting in Vienna.
West Texas Intermediate for January delivery fell 16 cents to $57.14 a barrel at 10:38 a.m. on the New York Mercantile Exchange.
Brent for January settlement, which expires Thursday, rose 80 cents to $63.91 on the ICE Futures Europe exchange. Brent traded at a premium of $6.77 to January WTI. The more-active February contract added 49 cents to $63.02.
For Russia, details about how the supply curbs eventually will be wound down seemed to be as important as the duration of the extension, according to people involved in closed-door negotiations prior to the ministerial meeting. Al-Falih said Thursday before the meeting that it’s premature to talk about an exit strategy because OPEC and its allies are relying on oil demand in the third quarter of next year to finally wipe out the surplus.
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