Crude-oil prices traded sharply lower Thursday, following news that OPEC has delayed a decision on production until after it meets with other producers on Friday.
Growing concerns that oil producers won’t reach an agreement to aggressively reduce production has also weighed on prices.
Members of the Organization of the Petroleum Exporting Countries have concluded their meeting in Vienna, without deciding on output-cut figures, the Wall Street Journal reported, citing comments from OPEC delegates. The delegates also said OPEC plans to debate output figures with non-OPEC producers during their meeting Friday.
Against that backdrop, West Texas Intermediate crude for January delivery CLF9, -4.10% lost $2.30, or 4.4%, to $50.59 a barrel on the New York Mercantile Exchange.
Global benchmark February Brent crude LCOG9, -3.33% traded $2.14, or 3.5%, to $59.42 a barrel on ICE Futures Europe.
“Heading into the meeting, investors had been leaning on a 1.3 [million barrel a day] cut that Saudi Arabia had been hinting at,” but the Saudis may now “be leaning toward a 1.0 [million barrel per day] cut,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
OPEC members and their oil-producer allies appear “to be caught in the middle between U.S. President Trump, who has been loudly calling for lower prices and no production cuts and investors who, through market action, have been clearly telegraphing that they would clearly like to see deeper cuts,” he said.
The cartel is under pressure to support prices, which have fallen by more than 30% since reaching multiyear highs in October.
But on Wednesday, U.S. President Donald Trump raised pressure on OPEC to keep oil production flowing. He tweeted Wednesday, “Hopefully OPEC will be keeping oil flows as is, not restricted. The World doesn’t want to see, or need, higher oil prices!”
The price selloff extends a rocky stretch for oil markets over the past few weeks. Prices for U.S. benchmark WTI crude tumbled 22% in November, the biggest monthly fall since October 2008.
Concerns about rising global crude supply, combined with anxieties about the health of global economic growth—and its implications for oil demand—have sent crude prices sharply down.
On Thursday, Saudi energy minister Khalid al-Falih said a cut of 1 million barrels a day would be sufficient to balance the market, but all options were on the table.
“As ministers gather…the general belief is that some kind of cut will be agreed—anywhere between 1 [million] and 1.5 million barrels a day,” said Tamas Varga, an oil analyst at brokerage PVM, while Thursday’s meeting was held.
If no deal is reached, “prices would fall in the foreseeable future,” Varga added.
There are a number of stumbling blocks to reaching a decision. Iran, OPEC’s third-biggest producer, said Thursday that it can’t participate in any cuts until the U.S. lifts sanctions against the country. The country’s oil minister, Bijan Zangeneh, said Thursday that oil prices between $60 and $70 a barrel would be acceptable.
The decline in crude-oil prices, considered a risk asset in the investing complex, comes as jitters pegged to international trade relations between China and the U.S. escalated. Market tension intensified after the arrest of Huawei Technologies’s CFO Meng Wanzhou in Canada at the request of the U.S.
“We start today with global equity markets under renewed heavy pressure, which is not the best environment for oil if OPEC is not able to produce a convincing supply reduction agreement,” said Olivier Jakob, managing director of consulting firm Petromatrix.
Trade disputes have raised questions about global growth and demand for crude, with the Dow Jones Industrial Average DJIA, -2.44% and the S&P 500 index SPX, -2.28% tumbled anew Thursday, after being closed on Wednesday in observance of the national day of mourning for former President George H.W. Bush.
The Energy Information Administration will release its U.S. petroleum inventory data at 11 a.m. Eastern—a day later than usual because of the day of mourning. That could provide further guidance to oil investors.
On average, analysts surveyed by S&P Global Platts expect the EIA to report a decline of 2.39 million barrels in crude supplies. If realized, that would be the first fall reported by the EIA in 11 weeks.
The analysts surveyed by S&P Global Platts also forecast supply increases of 357,000 barrels for gasoline and 1.25 million barrels for distillates.
On Nymex, January gasoline RBF9, -2.82% lost 3.1% to $1.40 a gallon and January heating HOF9, -2.61% traded at $1.838 a gallon, down 2.7%.
January natural gas NGF19, -3.04% dropped 3.7% to $4.302 per million British thermal units. The EIA will release its weekly data on natural-gas supplies on Friday, a day later than usual because of Wednesday’s day of mourning.
Mark DeCambre contributed to this article