Oil futures tumbled Monday after a weekend meeting of major oil producers left doubts over their ability to complete proposed output cuts. West Texas Intermediate crude for December deliver fell $1.84, or 3.8%, to end at $46.86 a barrel.
With the official meeting of the Organization of the Petroleum Exporting Countries only a month away, many market watchers openly doubt whether the cartel can organize consensus on cutting production in time.
In a meeting in Vienna over the weekend, non-OPEC members Azerbaijan, Brazil, Kazakhstan, Mexico, Oman and Russia all refused to commit to cut or even freeze production until there was agreement among OPEC member states. Within OPEC, Iraq and Iran continue to insist on exemptions from output cuts. “Don’t worry though. OPEC will meet again in a month from now. We can expect them to build up our expectations until then, but please don’t buy into the hype,” wrote Mati Greenspan, senior market analyst at eToro, in a note.
Morgan Stanley said in a note that the recent discussions with non-OPEC members aimed at increasing market confidence only succeeded in achieving the opposite. “After meeting in Vienna, OPEC remains at an impasse. Non-OPEC members are also refusing to join until OPEC formalizes an agreement, with several refusing to cut at all,” analysts from the bank said.
Meanwhile, the U.K.’s Barclays has predicted higher oil prices in 2017, regardless of the outcome of the OPEC meeting on Nov. 30. In a note, the bank said that the winter months should see large reductions in global stock levels leading to a much tighter market in 2017 than has been witnessed in 2015 and 2016.
The bank added that prices should average in the low $50-a-barrel range for the remainder of the fourth quarter and then rise to average $57 a barrel in 2017.