NEW YORK – Oil prices dropped more than 3 per cent on Monday to touch a one-month low on doubts about OPEC‘s ability to implement its planned production cut, even as cartel officials approved a document outlining their long-term strategy.
Officials from the Organization of the Petroleum Exporting Countries (OPEC) approved the document on Monday in a sign its members are achieving a consensus on managing production.
But OPEC has so far achieved little otherwise. Cartel representatives met on Friday in Vienna, and then again on Saturday with their counterparts from non-member producers. They did not reach any specific terms, and Iran has been reluctant to even freeze its output, sources said.
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“The market is becoming a bit weary,” said Kyle Cooper, analyst at ION Energy in Houston. “Unless OPEC can circle the wagons and get everyone on the same page, the market’s going to be skeptical.”
Brent’s front-month contract, which expires after Monday’s session, was down $1.54, or 3.1 per cent, at $48.17 a barrel by 1:43 p.m. EDT. It hit a low of $47.98 during the day.
The more active next-month Brent contracts were down $1.77, or 3.5 per cent, at $48.91 a barrel.
U.S. West Texas Intermediate (WTI) futures were trading down $1.55, or 3.2 per cent, at $47.15 a barrel after falling to $46.94.
The benchmarks were at their lowest since Sept. 29.
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Reservations over OPEC’s output cut prompted analysts to leave their price outlooks broadly unchanged, a Reuters poll on Monday showed.
Compounding the bearish sentiment was data from energy monitoring service Genscape, cited by traders, which showed a build of 585,217 barrels of crude at the storage hub and delivery point for WTI futures in Cushing, Oklahoma, in the week to Oct. 28.
Oil prices have risen as much as 13 percent since OPEC announced on Sept. 27 a production cut to support prices after a they began slump beginning in mid-2014.
The cartel has not specified how much each individual member should cut, saying that will be finalized at a Nov. 30 meeting.
Non-member Russia had agreed to cooperate, but a draft federal budget showed it expects to increase its output by 0.7 percent next year and 0.9 percent in 2018.
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Russia gave the green light on Monday to a new oilfield expected to produce 4.4 million tonnes (90,000 bpd) of crude in 2017.