Recap: After a volatile day of trading, oil futures finished lower on the day, as the 5.3 million barrel build in U.S. crude oil inventories overshadowed the possibility of an agreement to freeze output by OPEC and other major oil producers. Initially, traders thought the increase would likely bring about an agreement among those meeting in Vienna on Nov. 30, as there is need for an immediate solution to falling prices. This, combined with a statement by Russia's Energy Minister that Russia was ready to support OPEC's decision on imposing an output freeze, sent oil futures to their highs of the day. December WTI traded as high as $46.41, up 1.3% on the day, while January Brent topped the session at $47.56, up 1.2%. Once again, the global supply glut weighed on prices, pushing WTI to a settlement of $45.57, down 24 cents, or 0.52%, with Brent finishing 32 cents, or 0.68% lower, to settle at $46.63.
December RBOB fell 1.6 cents, or 1.2%, to $1.319 a gallon and December heating oil finished just under a penny at $1.435 a gallon.
Fundamental News: Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending November 11th fell to 61,454,642 barrels, down 18,586 barrels on the week and down 77,670 barrels from Tuesday, November 8th.
The IEA increased its outlook for US output in 2020 by 900,000 bpd, estimating it will reach 14.1 million bpd amid growth from shale output. Its projection for the rest of the world is weaker than before, after new projects to develop conventional crude fell to the lowest level since the 1950s. That will allow OPEC to preserve its share of global markets. US oil production will expand by 1.3 million bpd from 2015 to 2020, with about 85% of the growth accounted for by shale oil. It said US shale oil producers will increase their output if oil prices reach $60/barrel. The head of the IEA, Fatih Birol, said that level would be enough for many US shale companies to restart stalled production, although it would take about nine months for the new supply to reach the market.
OPEC sources stated that OPEC officials are working to agree on details of their plan to limit oil supply and gaps over some sticking points are narrowing. One issue has been the level of production at which Iran would be expected to freeze its output. Sources say Iran wants an output cap of 4 million bpd, while other members of OPEC want Iran to freeze output at about 3.7 million bpd. OPEC embarked on its final diplomatic effort to secure a deal, with its top official heading to countries such as Russia. This followed an unannounced meeting in London between OPEC Secretary General, Mohammed Barkindo, and Saudi Arabia's Energy Minister, Khalid al-Falih. OPEC Secretary General is visiting more OPEC members in the next few days. He is scheduled to meet Venezuela's President Nicolas Maduro later on Wednesday and then travel to Ecuador and Iran.
Iran's Oil Minister, Bijan Zanganeh will not attend informal talks between some OPEC members in Doha on Friday. Two OPEC sources said Iran's OPEC governor would represent Iran instead. Earlier on Wednesday, an Algerian energy source said a number of energy ministers from OPEC countries would meet in Doha on Friday to try to build consensus over the group's decision to limit output.
Russia's Energy Minister, Alexander Novak, said Russia is ready to support OPEC's decision on an oil output freeze. He said Russia will continue consultations on joint action for the oil market. He hopes OPEC finds a consensus on its decision to cut output by November 30th and sees a big possibility for OPEC to agree. He said there are discussions of scenarios to reach an oil market balance in a shorter period of time. He also stated that Russia is discussing whether to have a meeting with Saudi Arabia's Oil Minister, Khalid al-Falih, in Doha.
Early Market Call - as of 9:00 AM EDT
WTI - Dec $46.22, up 66 cents
RBOB - Dec $1.3331, up 1.4 cents
HO - Dec $1.4592, up 2.42 cents
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