Oil is taking a battering on Wednesday morning, amid fears that Russia is not keen on OPEC’s planned oil production cut deal.
US crude is back below $50 a barrel in early trade in London and UK Brent is close to breaking through that psychologically important threshold too.
Here is how US crude looks at just after 7.25 a.m. BST (2.25 a.m. ET):
And here is Brent at the same time:
The falls follow reports of an Interfax story stating Russian is against OPEC oil production cuts. It comes just two days after Russia and Saudi Arabia agreed that something must be done to stabilise the oil market. Russia is a powerful player in OPEC, meaning it could kill the deal. That would leave oversupply as a big problem in the oil market.
It is the second bad news story about the floated oil deal in recent days. Iraq over the weekend joined Iran, Nigeria, and Libya in seeking an exemption to cutting oil output for an OPEC deal, which will be discussed at the group’s meeting in late November.
Michael Hewson, chief market analyst at CMC Markets, says in an emailed statement on Wednesday morning: “US markets had a disappointing session yesterday, reversing Monday’s gains, dragged lower by a decline in oil prices amidst continued disagreements amongst OPEC and non OPEC members about the potential, as well as their ability to deliver on a production freeze.
“Higher than expected API inventory data overnight also helped weigh on sentiment, as stocks showed a rise of 4.8 million barrels, well above the 1.7 million barrels expected.” (The API is the American Petroleum Institute.)
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