Oil drops as OPEC+ resume talks on output cut extension after impasse

TOKYO: Oil prices fell on Thursday as producers including Saudi Arabia and Russia locked horns over the need to extend record production cuts set in place in the first wave of the COVID-19 pandemic.

Brent crude was down 15 cents, or 0.3%, at $48.10 a barrel by 0155 GMT, after gaining 1.8% on Wednesday. U.S. oil was down 17 cents, or 0.4%, at $45.11 a barrel, having ended 1.6% higher the previous session.

The Organization of the Petroleum Exporting Countries (OPEC) and Russia are resuming discussions on Thursday to agree on policies for 2021 after earlier talks produced no compromise on how to tackle weak oil demand amid a new coronavirus wave.

OPEC and allies, in the group known as OPEC+, had been widely expected to roll over oil cuts of 7.7 million barrels per day, or 8 percent of global supplies, at least until March 2021.

But after hopes for a speedy approval of anti-virus vaccines spurred a rally in oil prices at the end of November, some producers questioned the need to tighten oil policy, which is supported by OPEC leader Saudi Arabia.

“Any sign that the group is struggling to reach an agreement could weigh on prices,” ANZ Research said in a note.

Britain approved Pfizer Inc’s COVID-19 vaccine on Wednesday, jumping ahead in a global race to start the most crucial mass inoculation programme in history.

In the United States, crude stockpiles fell last week, while gasoline and distillate inventories rose sharply as refiners slowed production amid weakening demand, the Energy Information Administration said on Wednesday.

Oil stocks fell by 679,000 barrels in the week to Nov. 27, by less than the 2.4 million-barrel decline forecast in a Reuters poll of analysts.

Gasoline stocks increased by 3.5 million barrels, while distillate inventories were up by 3.2 million barrels.

Adding to international supplies, Venezuela’s crude exports almost doubled last month, according to data from the state-run PDVSA and Refinitiv Eikon.