Oil slips as focus shifts from Trump to crude glut, Opec

[NEW YORK] Oil prices settled more than one per cent lower on Thursday as markets recovered from shock over US President-elect Donald Trump's victory and focused on oversupply concerns, as well as whether Opec will decide later this month to cut production.

Most markets shook off post-election losses and bounced back on Thursday, but oil still faces a glut that has kept prices under pressure for much of the past two years.

The Organization of the Petroleum Exporting Countries (Opec) meets in Vienna on Nov 30 for talks on output cuts. It has sought cooperation from non-members, including Russia, but doubts remain over whether they can come to an agreement.

Brent crude settled down 54 US cents, or 1.1 per cent, at US$45.84 a barrel. US West Texas Intermediate crude ended 61 US cents, or 1.4 per cent, lower at US$44.66.

WTI's front-month discount to the second-month, or contango, hit its widest in nearly three months on concerns about domestic oversupply as data shows rising stockpiles, traders said.

The US Energy Information Administration on Wednesday reported a 2.4 million-barrel rise in domestic crude inventories to 485 million barrels last week.

"When the physical markets are weak, that influences people to hedge their cargos, and that results in selling," said Scott Shelton, energy futures broker with Icap in Durham, North Carolina.

The market was under pressure even as stockpiles at the US delivery hub for crude futures in Cushing, Oklahoma dropped by 663,916 barrels for the week to Nov 8, according to traders, citing energy monitoring service Genscape.

The International Energy Agency (IEA) said the global market will remain in surplus unless Opec can reach an agreement at its Nov 30 meeting.

"If the supply surplus persists in 2017, there must be some risk of prices falling back," the IEA said in its monthly report.

Prices will likely rebound, at least temporarily, in the coming days and may go above US$50 a barrel as traders cling to the hope of an Opec deal, said Fawad Razaqzada, analyst at Forex.com.

"Although there is so much doubt about the prospects of a production cut or freeze deal between the Opec and Russia, an agreement is still possible," he said.

Russian Energy Minister Alexander Novak said he saw higher chances of reaching a deal than before, and that global crude output could be frozen at November levels if an agreement is reached.

REUTERS