Crude oil is losing its OPEC rally

caption
Algeria’s energy minister, Noureddine Boutarfa, center, with Qatar’s minister of energy and industry, Bin Saleh Al-Sada, left, and OPEC’s acting secretary-general, Mohammed Barkindo, after a meeting of oil ministers of OPEC countries in Algiers, Algeria.
source
AP/Sidali Djarboub

Crude-oil prices were lower Tuesday for the first day since OPEC agreed last Wednesday to limit its production.

West Texas Intermediate crude oil, the benchmark of US prices, jumped 12% last week – a gain not seen since oil prices crashed in 2014 – after OPEC made its first deal in eight years.

A group of oil producers both within OPEC, the Organization of the Petroleum Exporting Countries, and outside it agreed to reduce output by about 1.8 million barrels a day, or 2% of the total world output, according to figures cited by Reuters.

But on Monday, a Reuters survey found that OPEC’s output hit a record high in November, indicating that member countries could have a hard time sticking to their plan.

“We remain skeptical of Iraqi and Iranian compliance,” Michael Cohen, the head of energy commodities research at Barclays, said in a note Monday.

“OPEC export levels may remain elevated in 1H 17 if countries step on the gas in December and fill their storage. Lower demand and lower refining runs should also help the Saudis keep exports high.”

WTI fell by 1.4% to $51.08 a barrel. Brent crude, the international benchmark of prices, dropped 1% to $54.40.

On Friday, data from the driller Baker Hughes showed that US producers continued to increase the number of active rigs in a lagged response to stabilizing oil prices.

The American Petroleum Institute will release its weekly data on inventories after the market close on Tuesday. The Energy Information Administration will publish its numbers Wednesday, and they are expected to show a decline by about 1.13 million barrels.

source
Markets Insider