Oil Falls as OPEC+ Meeting Delay Dims Hopes for More Output Cuts - Yahoo Finance

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(Bloomberg) -- Oil extended declines as the OPEC+ meeting that had been set for the weekend was delayed, denting traders’ expectations that the cartel will intervene to tighten supplies.

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West Texas Intermediate fell as much as 5.1% to trade below $74 a barrel after the organization’s gathering was pushed back until next week. The talks had earlier hit turbulence as Saudi Arabia undertook difficult negotiations with member states about production levels. Meanwhile, US crude stockpiles rose 8.7 million barrels last week, reaching the highest level since July, adding another headwind for prices.

Wednesday’s declines reflect the market’s concerns of what may happen if OPEC+ can’t reach an agreement, said Rebecca Babin, a senior energy trader at CIBC Private Wealth.

“The market lives in fear of a 2020 outcome,” when the cartel failed to stem a price decline and oil even temporarily went negative, she said.

Crude has dropped to three-month lows in recent weeks amid indications supplies are expanding. Growing production from nations both inside and outside of the Organization of Petroleum Exporting Countries and its allies has complicated the run-up to the meeting.

Key market gauges along the oil futures curve have also been flashing weakness in recent days, countering expectations that supplies would tighten toward the end the year. The gap between the nearest two contracts for WTI is in a bearish contango pattern — where longer-dated prices command a premium to nearer ones.

That poses an additional challenge for OPEC+ by raising the risk of trend-following funds increasing selling pressure, as contango is usually seen as a bearish signal. Some large oil and cross-commodity exchange-traded funds have also been posting outflows over the last few days.

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