Oil weakened after OPEC and its allies agreed to extend output cuts for another nine months, disappointing investors who had hoped for more. Futures dropped as much as 3.3 percent in New York. OPEC and non-OPEC producers have agreed to prolong their supply deal through March, Iran’s Minister of Petroleum Bijan Namdar Zanganeh said in Vienna. No additional producers have been added to the deal, said a delegate familiar with the matter, who asked not to be identified because the information isn’t public.
The curbs are working, and prolonging the deal through March will “do the trick,” Saudi Oil Minister Khalid Al-Falih said before the ministerial meeting in Vienna Thursday. The Organization of Petroleum Exporting Countries will empower its monitoring committee to recommend “further interventions” if needed, Al-Falih said. Libya and Nigeria, which have boosted output since the curbs started in January, will continue to be exempt from production cuts, he said.
“It’s all gone as expected,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. “This is a rollover of existing cuts with no changes, so it makes sense to stick to your positions.”
West Texas Intermediate for July delivery fell $1.61, or 3.1 percent, to $49.75 a barrel at 11:41 a.m. on the New York Mercantile Exchange. Total volume traded was 60 percent above the 100-day average.
Brent for July settlement slipped $1.53 to $52.43 a barrel on the London-based ICE Futures Europe exchange.
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“They’re still staring down infrastructure build-out in some member countries and rising output here in the U.S.,” John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy, said by telephone.
U.S. crude stockpiles dropped for a seventh week, by 4.43 million barrels, according to data from the Energy Information Administration Wednesday. They were forecast to fall by 2 million barrels in a Bloomberg survey. American crude output increased by 15,000 barrels a day to 9.32 million a day, the EIA said.