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Oil slides as non-Opec nations demure on output limit plan
[LONDON] Oil prices slid on Monday after non-Opec producers made no specific commitment to join Opec in limiting oil output levels to prop up prices, suggesting they want the oil producing group to solve its differences first.
Officials and experts from Opec countries and non-Opec nations including Azerbaijan, Brazil, Kazakhstan, Mexico, Oman and Russia met for consultations in Vienna on Saturday and only agreed to meet again in November before a scheduled regular Opec meeting on Nov. 30, they said in a statement.
London Brent crude for December delivery was down 38 cents at US$49.33 a barrel by 1047 GMT after settling down 76 cents on Friday.
US WTI crude for December delivery was trading down 30 cents, or 0.6 per cent, at US$48.40 a barrel, after closing down US$1.02 on Friday. "Oil prices are starting the new week of trading down after a meeting between Opec and non-Opec countries failed to produce any agreement at the weekend," Commerzbank said in a note.
It added there could be more downward pressure later in the day as it expected Opec production surveys to show the cartel produced "significantly more oil than necessary in October."
On Friday, Opec members failed to agree how to put in place a global deal to limit production, following objections from Iran which has been reluctant to even freeze its output, sources said.
Opec and non-Opec countries said in a joint statement that their Saturday meeting was a "positive development" towards reaching a global output limiting deal on Nov. 30.
Robin Bieber, director with PVM Oil Associates, said the Opec deal was "a shambles." "If Opec were in any doubt what awaits failure to agree a production cut in November last week's price action should have been a wake-up call," Bieber said.
Asian imports of Iranian crude oil jumped by 70 per cent in September on the year, a sign of its growing market share, while Russia expects to increase its oil output by 0.7 per cent next year and a further 0.9 per cent in 2018, the draft federal budget showed.
Russia also expects crude production to hit a record-high 548 million tonnes in 2017, up from an estimated 544 million tonnes this year.
In another bearish sign, money managers cut their net long US crude futures and options positions for the first time in five weeks in the week ended Oct 25, the US Commodity Futures Trading Commission (CFTC) said on Friday.