Oil prices sink, reversing gains as Saudi TV reports looming output rise

3 minute read

Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford/File Photo

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  • OPEC+ rebuffs U.S. calls for speedier oil output increases
  • Saudi oil output to exceed 10 mln bpd in Dec -Al Arabiya
  • Iran nuclear talks to resume on Nov. 29

NEW YORK, Nov 4 (Reuters) - Oil prices sank on Thursday, reversing earlier gains in a volatile session after a report that Saudi Arabia's oil output will soon surpass 10 million barrels per day for the first time since the outset of the COVID-19 pandemic.

The report, from Saudi-owned Al Arabiya TV, came after the nation, along with other Organization of the Petroleum Exporting Countries and its allies, agreed to stick to previously agreed upon production increases.

Brent crude fell $1.45, or 1.8%, to settle at $80.54 a barrel. Earlier, Brent rose to $84.49 a barrel. U.S. West Texas Intermediate crude fell $2.05, or 2.5%, to settle at $78.81 a barrel, well off the session high of $83.42.

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Since Tuesday's close, Brent and WTI have fallen by about 5% and 6%, respectively.

The Organization of the Petroleum Exporting Countries and allies, collectively known as OPEC+, agreed to stick to plans to raise oil output by 400,000 barrels per day (bpd) on a monthly basis, sources said, despite calls from the United States for extra supply to cool rising prices. read more

Saudi Arabia has already dismissed calls for speedier oil supply increases from OPEC+. But the Al Arabiya TV report said the Saudis will reach 10 million bpd in December.

Oil stocks will see "tremendous" builds at the end of 2021 and early 2022 because of slowing consumption, Saudi Energy Minister Prince Abdulaziz bin Salman said on Thursday.

Oil prices, which had previously been up by more than $2 per barrel, began paring gains as OPEC+ met.

"A large (speculative) position was loading up" before OPEC, said Bob Yawger, director of energy futures at Mizuho.

Yawger said traders then were inclined to sell and take profits rather than risk that the market could slip further as the White House calls for increased output.

"They preferred to book profit than look to get burned by any Biden counterpunch," Yawger said, referring to U.S. President Joe Biden.

The White House on Thursday criticized a decision by top oil producers to keep oil output steady, saying OPEC and its allies appeared "unwilling" to use their power to help the global economic recovery.

Top producers Saudi Arabia and Russia are confident higher oil prices will not elicit a fast response from the U.S. shale industry, OPEC+ sources said. U.S. companies have pledged to preserve capital and prioritize investor returns. read more

Still, several large oil companies plan to increase output or shale spending next year. read more

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Reporting by Stephanie Kelly in New York; reporting by Bozorgmehr Sharafedin in London and Florence Tan in Singapore Editing by David Gregorio, Will Dunham and Kirsten Donovan

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

A New-York-based correspondent covering the U.S. crude market and member of the energy team since 2018 covering the oil and fuel markets as well as federal policy around renewable fuels.