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REFILE-UPDATE 7-Oil down on OPEC doubts as it floats 6-month output cap plan

Published 12/10/2016, 07:17 am
REFILE-UPDATE 7-Oil down on OPEC doubts as it floats 6-month output cap plan
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By Barani Krishnan

NEW YORK, Oct 11 (Reuters) - Oil prices on Tuesday retreated from one-year highs, after OPEC said it was trying to reach a global agreement to cap production for at least six months amid doubts about how much that would reduce a crude glut.

The International Energy Agency, the energy watchdog of the West, said it was unclear how rapidly global oil supply could fall in line with demand even if the Organization of the Petroleum Exporting Countries and major producer Russia agreed on a steep output cut. IEA/M

"Net, we find that an agreement to cut production, while increasingly likely, remains premature given the high supply uncertainty in 2017," Goldman Sachs (NYSE:GS) said in a note. a deal would be "self-defeating if it were to target sustainably higher oil prices," Goldman said.

Oil has rallied than 13 percent in less than two weeks since OPEC proposed its first production curbs in eight years. Still, prices remain about half of mid-2014 highs above $100 a barrel.

On Tuesday, Brent crude LCOc1 settled down 73 cents, or 1.4 percent, at $52.41 a barrel, retreating from a one-year high of $53.73 hit on Monday.

U.S. West Texas Intermediate (WTI) crude CLc1 fell 56 cents, or 1 percent, to settle at $50.79.

Global oil industry officials in Istanbul for the World Energy Conference issued a raft of statements on OPEC's production plan.

The energy ministers of Saudi Arabia and Russia intend to hold further consultations in Riyadh after the Istanbul meeting, the Saudi energy ministry said in a statement. can say that many countries from outside OPEC are willing to join ... we are not talking about support, we are talking about contribution," Saudi Energy Minister Khalid al-Falih told Reuters on Tuesday in Istanbul. Igor Sechin, Russia's most influential oil executive and the head of Rosneft ROSN.MM , told Reuters in an interview his company will not cut or freeze oil production as part of a possible agreement with OPEC. Energy Minister Alexander Novak said the base-case scenario for Russia would be to leave current output unchanged. aims to cut production by 700,000 barrels per day to 32.5 million to 33.0 million bpd by its next policy meeting in Vienna on Nov. 30.

OPEC has asked non-OPEC producers besides Russia to contribute with cuts too, although the United States, the world's No. 1 oil producer, will not be part of the plan.

Analysts worry that production of U.S. shale oil, crimped this year by prices as low as nearly $26 a barrel, will begin to increase again if crude prices maintain their recent upward momentum. RIG/U

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