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UPDATE 2-Oil prices fall on renewed doubts on OPEC-led production cut

Published 23/11/2016, 04:50 pm
© Reuters.  UPDATE 2-Oil prices fall on renewed doubts on OPEC-led production cut
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* Most analysts expect OPEC-led cut to be agreed

* But doubts remain on cut being deep enough to end glut

* Strong dollar weighs on oil prices

* Trading thin ahead of U.S. Thanksgiving holiday (Recasts, adds comment, updates prices)

By Keith Wallis Henning Gloystein

SINGAPORE, Nov 23 (Reuters) - Oil prices fell in Asian trade on Wednesday, reversing earlier gains, as doubts re-emerged over whether OPEC would agree to a crude oil production cut at a ministerial meeting next week.

A strong dollar, which traded near the 13 1/2-year peak hit last week, also weighed on prices amid thin trading ahead of the U.S. Thanksgiving holiday on Thursday.

International Brent crude oil futures LCOc1 slipped 8 cents to $49.04 a barrel at 0548 GMT after climbing to $49.42 a barrel earlier in Wednesday's session on optimism OPEC would agree to an output cut.

Reuters commodities analyst Wang Tao said that Brent could rise to $49.85 per barrel, a level marked by several technical resistance factors. West Texas Intermediate (WTI) crude oil futures CLc1 fell 8 cents to $47.95 a barrel after rising to $48.30 earlier on Wednesday.

"The reason prices fell is renewed concern by traders in the ability of producers to reach agreement with Iran and Iraq on production cuts," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

Wednesday's lethargy came after oil prices rallied earlier this week. Traders had anticipated the Organization of the Petroleum Exporting Countries (OPEC) would successfully implement a production cut at its Nov. 30 meeting in order to prop up prices. oil output among OPEC members running at around 34 million barrels a day, the market is suddenly looking at substantial cuts to get back to the level of 32 million to 33 million barrels a day when production curbs were first mooted earlier this year, Spooner said.

The OPEC gathering will debate an oil output cut of 4 to 4.5 percent for all of its members except Libya and Nigeria next week but the deal's success hinges on an agreement from Iraq and Iran, which may not give a full backing, three OPEC sources said Tuesday.

"The best case out of the OPEC meeting is an agreement to get production back to the 33 million barrel levels. I think if that happens there is scope to see oil surge up into the mid-$50s a barrel at least temporarily," Spooner said.

Short-term though, analysts said that investors were currently unwilling to push crude prices to $50 a barrel or higher.

"Their reticence is understandable given that longs (long positions) put on above that level have not ended well in recent times," said Jeffrey Halley, a senior market analyst at OANDA brokerage in Singapore.

"Tonight's (U.S.) EIA Crude Inventory numbers should provide a welcome, albeit temporary sideshow to the OPEC main event. Otherwise, we expect Asia to continue the sideways trading ranges," Halley said.

The Energy Information Administration (EIA) is due to publish official U.S. crude oil and refined product inventory data later on Wednesday.

U.S. crude stockpiles are expected to rise by 700,000 barrels, according to the latest Reuters poll, while distillates will fall and gasoline will rise.

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