Dubai: Oil prices fell on Wednesday, extending losses for a third session to hit its highest level, on fading optimism that Russia will agree on an output cut after Iraq also resisted similar moves.
Brent crude fell 1.91 per cent to trade below the keenly watched $50 per barrel, the lowest level in a few weeks. WTI on NYMEX was 1.66 per cent lower at $49.13.
“Oil prices remain vulnerable to the downside in the near term due to stretched positioning and a likely further build-up in inventories over 4Q16. Structurally, we reiterate our view of a balanced market in 2017 and oil rising to $55 per barrel or even higher in the second half of 2017 and beyond,” said Giovanni Staunovo, commodity analyst at UBS Wealth Management over email.
Media reports said Russian envoy to Opec said output cuts are not an option, while Iraq said earlier in the week that they should be expected from output cuts.
“Opec will and have to come up with a plan as it would otherwise be seen as a huge failure. Having supported the market by verbal intervention most of the year and then fail when action is promised could trigger a big and unwanted sell-off in the market,” Ole Hansen, head of commodity strategy at Saxo Bank said.
The technical committee is due to meet on October 28-29 to discuss possible scenarios on output cuts, a government official told Gulf News.
“Sentiment remains bearish towards oil with this horrible combination of uncertainty and oversupply fears creating a firm foundation for sellers to drag oil prices lower in the short-term. From a technical standpoint, a breakdown below $49 could open a path lower towards $47.50,” FXTM Research Analyst Lukman Otunuga said.
