Oil Falls to 4-Week Low as OPEC Discusses Quotas, Equities Dive

Updated on
  • OPEC panel talks as Iraq says it should be exempt from quotas
  • U.S. Stocks Decline After FBI Reopens Clinton Investigation

Crude tumbled to the lowest in almost four weeks as an OPEC committee discussed production targets and U.S. equities dropped after the FBI reopened its investigation into Hillary Clinton’s use of an unauthorized e-mail server.

Futures fell 2.1 percent on Friday. Brazil will attend the Organization of Petroleum Exporting Countries gathering Saturday in Vienna as the bloc that pumps about 40 percent of world output seeks non-member cooperation on curbing production. Brazil will join other exporters from outside the group, including Russia. The S&P 500 Index erased early gains after the Federal Bureau of Investigation said it would review the e-mails case, a politically explosive development less than two weeks before the presidential election.

Oil has fluctuated near $50 a barrel amid doubts about whether OPEC can implement the first supply cuts in eight years at its Nov. 30 summit. The outcome of the group’s committee talks, which will try to resolve differences over how much individual members should produce, will have ramifications for the market in the medium to long term, Secretary General Mohammed Barkindo said as the talks started. He called for members to “forge ahead together” after Iraq this week demanded to be exempt from any cuts.

"Oil traders are reacting to the weakness in the S&P 500," said Tim Evans, an energy analyst at Citi Futures Perspective in New York. "There’s still an abundance of supply and we need to hear some details about what OPEC is going to do."

West Texas Intermediate for December delivery dropped $1.02 to $48.70 a barrel on the New York Mercantile Exchange. It’s the lowest close since Oct. 4. Total volume traded was 16 percent below the 100-day average at 3:03 p.m. Prices declined 4.2 percent this week.

OPEC Meeting

Brent for December settlement dropped 76 cents, or 1.5 percent, to $49.71 a barrel on the London-based ICE Futures Europe exchange. It was the lowest close since Sept. 30. Prices slipped 4 percent this week. The global benchmark crude traded at $1.01 premium to WTI.

OPEC may agree on a collective cut and postpone “difficult decisions” on individual quotas, analysts Bassam Fattouh and Amrita Sen wrote in an Oxford Institute for Energy Studies report.

A technical meeting in Vienna on Friday ended without a final deal on country limits, but progress was made, a delegate who asked not to be named said.

For a story on an OPEC deal barely trimming the oil surplus, click here.

"OPEC is expected to kick the can down the street," said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. "There will probably be a wishy-washy, watered-down statement that says little. Iraq, OPEC’s second-biggest producer, wants to join Libya, Nigeria and Iran in being exempt from cuts, which makes it very difficult."

Brazil’s Oil and Gas Secretary Marcio Felix will leave Friday for Vienna, the country’s Energy Minister Fernando Bezerra Coelho Filho said by text message Thursday. The Latin American nation will boost output by 290,000 barrels a day next year to 2.9 million a day, the biggest increase of any non-OPEC country, according to the International Energy Agency.

Business was still looking pretty bleak for major oil companies halfway through their third-quarter earnings season. Exxon Mobil Corp. extended its longest streak of profit declines in almost three decades, while Chevron Corp. posted its first profit in a year, beating estimates.

Oil-market news:

  • The Seaway Legacy crude oil pipeline is expected to resume service late next week after the system that links Cushing, Oklahoma, to the Texas Gulf Coast was shut because of an Oct. 23 spill.
  • Eni sees the Kashagan oil field in Kazakhstan ramping up to 200,000 barrels a day by the end of this year, Chief Upstream Officer Antonio Vella said Friday.
  • Exxon Mobil said it discovered an oil field off the Nigerian coast that may hold as much as 1 billion barrels of crude, according to a statement Thursday.
  • OPEC may choose a “watered down” deal, which may be short of production targets agreed in September, BMI Research, a unit of Fitch, said in a note on Thursday.