Oil futures prices fell Friday, as traders adopted a wait-and-see stance ahead of next week’s crucial production meeting of the Organization of the Petroleum Exporting Countries, at which the cartel could strike a deal to cut output.
On the New York Mercantile Exchange, West Texas Intermediate crude futures finished down $2.02, or 4.2%, at $45.93 a barrel. Still, the contract managed a 0.5% weekly gain, putting up back-to-back weekly gains.
Brent crude, the global oil benchmark, fell $1.92, or 3.9%, to $47.08 a barrel on London’s ICE Futures exchange.
Expectations for a sizable production cut from OPEC have been building, with Saudi Arabia backing an effort to cut output by over 1 million barrels to 32.5 million barrels a day, people familiar with the matter told The Wall Street Journal. OPEC agreed in principle in September to cap output at 32.5 million to 33 million barrels a day, but details with be hammered out on Nov.30.
A large number of short positions, or bets on lower oil prices, mean crude could rise sharply if OPEC delivers a cut, according to consultancy Energy Aspects.
“With managed money short positions across WTI and Brent at record highs, the market is setting itself up for a possibly sharp short covering rally — should OPEC deliver an output cut of around 1 million barrels a day,” they said in a note to clients.