Tokyo/London — Oil prices fell on Thursday as producers, including Saudi Arabia and Russia, locked horns over the need to extend record production cuts set in place during the first wave of the Covid-19 pandemic.

Brent crude was down 26c, or 0.54%, at $47.99 a barrel by 9.50am GMT, after gaining 1.08% on Wednesday. US West Texas Intermediate (WTI) oil fell 33c, or 0.73%, to $44.95 a barrel, having ended the previous session 1.6% higher.

Oil cartel Opec and its allies including Russia (Opec+), are resuming discussions on Thursday to agree on policies for 2021 after earlier talks produced no compromise on how to tackle weak oil demand amid a new coronavirus wave.

Two Opec+ sources said on Thursday the group was leaning towards an oil cuts rollover with a gradual increase in output over the coming months. Opec+ had been widely expected to roll over oil cuts of 7.7-million barrels per day (bpd), or 8% of global supplies, at least until March 2021.

But after hopes for a speedy approval of Covid-19 vaccines spurred a rally in oil prices at the end of November, some producers questioned the need to tighten oil policy, which is supported by Opec leader Saudi Arabia.

“It is still expected that the group will come to a deal,” ING Economics said in a note.

Britain approved Pfizer’s Covid-19 vaccine on Wednesday, jumping ahead in a global race to start the most crucial mass inoculation programme in history.

In the US, crude stockpiles fell last week, while petrol and distillate inventories rose sharply as refiners slowed production amid weakening demand, the Energy Information Administration (EIA) said on Wednesday.

Oil stocks fell by 679,000 barrels in the week to November 27, less than the 2.4-million-barrel decline forecast in a Reuters poll of analysts.

Petrol stocks increased by 3.5-million barrels, while distillate inventories were up by 3.2-million barrels.

Adding to international supplies, Venezuela’s crude exports almost doubled last month, according to data from the state-run PDVSA and Refinitiv Eikon. 


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