Image: Oil pump jacks are seen next to a strawberry field in Oxnard, California February 24, 2015. REUTERS/Lucy Nicholson
By Ethan Lou
NEW YORK (Reuters) – Oil prices settled more than 1 percent lower on Thursday as markets recovered from shock over U.S. President-elect Donald Trump’s victory and focused on oversupply concerns, as well as whether OPEC will decide later this month to cut production.
Most markets shook off post-election losses and bounced back on Thursday, but oil still faces a glut that has kept prices under pressure for much of the past two years.
The Organization of the Petroleum Exporting Countries (OPEC) meets in Vienna on Nov. 30 for talks on output cuts. It has sought cooperation from non-members, including Russia, but doubts remain over whether they can come to an agreement.
Brent crude settled down 54 cents, or 1.1 percent, at $45.84 a barrel. U.S. West Texas Intermediate crude ended 61 cents, or 1.4 percent, lower at $44.66.
WTI’s front-month discount to the second-month, or contango, hit its widest in nearly three months on concerns about domestic oversupply as data shows rising stockpiles, traders said.
The U.S. Energy Information Administration on Wednesday reported a 2.4 million-barrel rise in domestic crude inventories to 485 million barrels last week.
“When the physical markets are weak, that influences people to hedge their cargos, and that results in selling,” said Scott Shelton, energy futures broker with ICAP in Durham, North Carolina.
The market was under pressure even as stockpiles at the U.S. delivery hub for crude futures in Cushing, Oklahoma dropped by 663,916 barrels for the week to Nov. 8, according to traders, citing energy monitoring service Genscape.
The International Energy Agency (IEA) said the global market will remain in surplus unless OPEC can reach an agreement at its Nov. 30 meeting.
“If the supply surplus persists in 2017, there must be some risk of prices falling back,” the IEA said in its monthly report.
Prices will likely rebound, at least temporarily, in the coming days and may go above $50 a barrel as traders cling to the hope of an OPEC deal, said Fawad Razaqzada, analyst at Forex.com.
“Although there is so much doubt about the prospects of a production cut or freeze deal between the OPEC and Russia, an agreement is still possible,” he said.
Russian Energy Minister Alexander Novak said he saw higher chances of reaching a deal than before, and that global crude output could be frozen at November levels if an agreement is reached.
(Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Marguerita Choy and Will Dunham)
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