Oil prices fell 0.8 percent, extending recent weakness ahead of next week’s OPEC meeting, while a rally in the dollar hurt commodities across the board.
U.S. West Texas Intermediate (WTI) crude futures settled down 46 cents or 0.8 percent to $56.09, while Brent crude futures fell 50 cents or 0.8 percent to $62.22 a barrel. Oil has been under pressure for the since peaking in early November; U.S. crude has lost 2.6 percent.
The Organization of the Petroleum Exporting Countries, together with a group of non-OPEC producers led by Russia, has been restraining output since the start of this year to try to lower global inventories and support prices.
The deal is due to expire in March 2018, and OPEC meets on Nov. 30 to discuss the policy. The expectation is for the group to extend the cut agreement to cover the whole of next year.
“It is widely believed that OPEC together with 10 non-OPEC countries will roll over their production for the whole of 2018, although Russia is holding its cards close to its chest,” PVM Oil Associates strategist Tamas Varga said.
Still the continued increase in U.S. crude production is a cause of concern for OPEC, and Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut, says U.S. producers have ramped up output following recent rallies in crude prices.
“The market is growing concerned about U.S. production,” said McGillian, “There are expectations we can see close to 10 million barrels a day within 3 to 6 months.”
OPEC forecast demand for its own crude would rise by 460,000 barrels per day (bpd) to 33.42 million bpd next year, in contrast with a forecast from the International Energy Agency (IEA) for a drop of 320,000 bpd to 32.38 million bpd.