Oil prices are expected to decline amid concerns whether OPEC would succeed in significantly cutting production to curb a worldwide glut that has been affecting markets for the past couple of years.
Brent crude futures LCOc1 were at $50.48 a barrel today at 0642 GMT, while U.S. West Texas Intermediate CLc1 crude was at $49.71 per barrel. The two benchmarks touched their lowest in nearly three weeks on Wednesday and were on track for their biggest weekly fall since last month.
The uncertainty over an output cut by the OPEC and non-OPEC producers is causing reluctance in the market to move prices too far in either direction, according to traders.
Some analysts are not confident about OPEC’s ability to convince other member, especially Russia, to cut production.
A senior market analyst at brokerage OANDA, Jeffrey Halley said ‘’with both Iraq and Iran saying they won’t be part of the cuts for various reasons, and Russia talking freezes not production cuts, the onus will fall on Saudi Arabia to pull any deal together.”
Separately, BMI Research stated that it would be difficult for OPEC to find a consensus reaching the production goal of 32.50-33 million barrel a day agreed in September. The research firm expects a significant decline in crude prices during the coming weeks amid current glut and uncertainty around OPEC’s output cut.