U.S. West Texas Intermediate (WTI) crude futures fell on Thursday morning at the start of an OPEC meeting in Vienna.
Prices had been close to $52.0 a barrel but sank to around $50.8 a barrel shortly after oil ministers began talking at a press conference at 9.30 a.m. London time.
“Nine months with the same level of production that our member countries have been producing at is a very safe and almost certain option to do the trick,” Khalid Al-Falih, Saudi Arabia’s energy and industry oil minister, told CNBC in Vienna.
Saudi Arabia’s delegate explained while all options had been considered ahead of the announcement – including deeper cuts and a possible six-month extension – he suggested reaching an agreement to curtail oil production by a further nine months appeared the “safe bet”.
Oil’s fall is believed to be due to traders feeling disappointed at the lack any deeper cuts to its production. Miswin Mahesh, an oil analyst at Energy Aspects, told CNBC via telephone that “oil prices are always choppy at this point” when OPEC meetings are happening.
he added that the price fall on Thursday morning “was probably triggered” by “imbalances” in the market with some expecting deeper cuts to OPEC production. A nine-month extension was already baked into the price, according to Mahesh.
This is a breaking news story, please check back later for more
Prices have risen on a consensus that a pledge by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, to cut supplies by 1.8 million barrels per day (bpd) would be extended into 2018, instead of covering only the first half of 2017.
Speculation was rife that the cuts may be extended by nine and possibly 12 months, said Jeffrey Halley, analyst at futures brokerage OANDA in Singapore.
The production cut, introduced in January, was initially only to cover the first half of 2017, but an ongoing glut has put pressure on OPEC and its allies to extend at a meeting in Vienna on Thursday.
