Oil prices eased on Dec. 6 as crude output rose in virtually every major export region despite plans by OPEC and Russia to cut production, triggering fears that a fuel glut that has dogged markets for over two years might last well into 2017.
International Brent crude oil futures were trading at $54.75 per barrel (bbl) at 2:07 a.m. CT (8:07 GMT), down 19 cents, or 0.3%, from close on Dec. 5. U.S. West Texas Intermediate crude was at $51.47/bbl, down 32 cents, or 0.6%.
Traders said the price falls were due to rising output from within OPEC and Russia.
Matt Stanley, fuel broker at Freight Investor Services International in Dubai, said the oil market was trying to find "some kind of level it is happy settling at."
"I have a feeling it is more towards the $50/bbl range than $55/bbl, not least because there is still ambiguity around production levels," Stanley said.
OPEC's oil output set another record high in November, rising to 34.19 MMbbl/d from 33.82 MMbbl/d in October, according to a survey based on shipping data and information from industry sources.
Russia on Dec. 2 reported average daily oil production of 11.21 MMbbl/d for November—its highest in almost 30 years.
That means that OPEC and Russia alone produced almost half of global oil demand, which stands just above 95 MMbbl/d.
The news came just days after OPEC and Russia agreed an historic deal to cut output in 2017, triggering a more than 10% rise in prices, in a bid to end a fuel supply overhang that has dogged markets for over two years.
In a further sign that the fight for market share is not over—especially in Asia, the world's biggest consumer region—Saudi Aramco cut the January price for its Arab Light grade for Asian customers by $1.20/bbl vs. December.
But analysts said oil prices were unlikely to tumble back to levels before last week's deal announcements.
"Other than a complete deal collapse, we don't see many catalysts to reverse the recent rally," U.S. bank Morgan Stanley said, adding that "a greater shift towards bullish positioning" was, in fact, pointing towards higher prices.
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