Oil prices slipped on Wednesday as doubts set in about Russia’s willingness to substantially extend a deal among some of the world’s biggest exporters to curb output to help tackle global oversupply and support prices, Reuters reported.
Brent crude futures were down 17 cents on the day at $63.44 a barrel, while U.S. light crude fell 28 cents to $57.71 a barrel.
Oil ministers from the Organization of the Petroleum Exporting Countries and other producers began gathering in Vienna on Wednesday to discuss extending a deal that has so far reduced crude oil production by 1.8 million barrels per day (bpd) and helped boost oil prices by 40 percent since the middle of the year.
The deal between most OPEC members and other major exporters including Russia is scheduled to expire in March 2018.
Producers at a meeting on Thursday are expected to agree to extend the deal, but the length of the extension remains an open question. This has kept the market on its toes.
“OPEC jitters are casting a dark shadow over oil prices as the pre-meeting chatter intensifies,” brokerage PVM wrote to clients.
OPEC sources said on Tuesday that whatever the deal, an option to review in June would also be included.
“The option to review the decision in June (means) they agree not to agree anything,” said Ralph Leszczynski, head of research at shipping brokerage Bancosta in Singapore.
Reluctance to agree a lengthy extension has been driven mainly by Russia and its concerns that a major extension could lead the market to overheat.
Moscow fears a strong price rally off the back of such a move could give an unsustainable boost to the rouble, one that harms Russian exports.
Some Russian producers including Rosneft, run by an ally of President Vladimir Putin, Igor Sechin, have questioned the rationale of prolonging the cuts, saying it will lead to a loss of market share to U.S. firms, which are not reducing output.
U.S. production has been rising in recent months, putting pressure on prices and acting as a counterweight to the OPEC supply cuts.
A report from the American Petroleum Institute (API) on Tuesday showed a weekly rise in U.S. crude inventories of 1.8 million barrels, confounding expectations for a 2.3 million barrel drop.
“The market had been looking forward to a supportive number due to the pipeline disruption from Canada,” said Ole Hansen, senior manager at Saxo Bank. “But nevertheless the overall level of inventory still managed to climb.”
A price rise generated by the shutdown of the Keystone pipeline, which supplies Canadian crude to the United States, turned out to be short-lived, with an announcement on Tuesday of a gradual restart to operations.
