Oil prices drop as OPEC resumes supply cut talks

Oil prices dropped on Thursday as producers comprising Saudi Arabia and Russia deliberated over the necessity of prolonging current output cuts introduced during the first wave of the coronavirus outbreak.

Brent crude, the benchmark for Nigerian oil grades, slipped by 26 cents or 0.54% to $47.99 per barrel at 10:50 West Africa Time, having risen by 1.08% on Wednesday. U.S. West Texas Intermediate crude dipped by 33 cents or 0.73% to $44.95 per barrel after gaining 1.6% at the session before.

Bonny Light, Nigeria’s principal oil grade, was up by $1.01 or 2.13% at $48.48 on Wednesday while Qua Iboe, another key national grade , climbed $1.01 0r 2.17% to $47.52 in early trading on Wednesday.

The Organization of the Petroleum Exporting Countries (OPEC) and its Russia-led allies, a grouping often called OPEC+, are restarting talks on Thursday to consent on policies for next year following a deadlock in previous meeting on how handle poor oil demand and weak oil prices in the face of fresh wave of the coronavirus.

The meeting was heading in the direction of an oil cuts retention with measured increase in supply expected in the near term, two OPEC sources told Reuters on Thursday.

It had been anticipated that OPEC+ would renew oil cuts of 7.7 million barrels per day, or 8 percent of the world’s supplies, at least till March next year in order to support oil prices.

Yet, a number of producers questioned the necessity of firming up oil policy, backed by OPEC leader Saudi Arabia after the promise for a swift endorsement of COVID-19 vaccines triggered a rebound in oil prices at November end.

Crude oil inventories in the U.S. fell last week just as gasoline and distillate stocks built dramatically as refiners delayed production in the midst of falling demand

Oil stocks declined by 679,000 barrels in the week to 27th November, less than the 2.4 million barrels fall predicted by Reuters in a Reuters poll of analysts.

Gasoline inventories rose by 3.5 million barrels, while distillate stocks grew by 3.2 million barrels, weakening oil prices.