Crude oil prices fell Tuesday, reversing earlier gains, amid persistent skepticism about OPEC's plans to cut production.
Oil prices are at their lowest point since late September, as the aftershocks from the bearish Organization of the Petroleum Exporting Countries' working committee meeting held in Vienna over the weekend rippled through the market. It was the largest one day decline since late September.
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U.S. crude futures fell 19 cents, or 0.41%, to $46.67 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 47 cents, or 0.97%, to $48.14.
Crude was initially pulled higher by gasoline and diesel, which surged early in the day owing to an outage on the Colonial Pipeline. Gasoline and diesel futures rose as market participants gauged the impact of the outage. Gasoline futures rose 6.46 cents, or 4.55%, to $1.4841 a gallon. Diesel futures rose 1.3 cents per gallon, or 0.86%, to $1.5169.
But Colonial said later that it had restarted its diesel pipeline and that its gasoline pipeline could return to service this weekend, so market participants turned their focus to OPEC and skepticism that the cartel will be able to implement a production cut.
"You have real worries that OPEC is not going to be able to come together with a production agreement," said Gene McGillian, research manager of Tradition Energy.
Crude prices are struggling to return to more than $50 a barrel, as investors don't expect OPEC and non-OPEC producers to reach an accord by the end of this month to scale back production.
Skepticism over the success of the deal intensified after the technical meeting in Vienna over the weekend ended inconclusively as producers weren't able to resolve their differences on current production levels, said ANZ Research.
More OPEC producers are also lobbying to be exempt from the deal. Iraq has reiterated it shouldn't be required to curtail its output because it needs the oil revenue to fund its war against Islamic State. Venezuela, which is grappling with a severe recession, says it should be excused from this round. Most market participants don't expect Iran, Libya and Nigeria to be bound by the terms of the deal, as their production in the past few years has been stunted by sanctions and militant attacks.
"The market is moving into the stage of show me rather than tell me or talk about it," Dominick Chirichella from the New York-based Energy Management Institute said in a note. "There has been a month of comments from just about every member of OPEC and yet nothing concrete has been released to provide market participants with any degree of confidence."
The London-based Marex Spectron assessed market conditions this week as bearish, reflecting uncertainty over OPEC and the continuing oversupply of oil.
In the near term, the market will be watching the weekly production and inventory data from the U.S. Analysts surveyed by S&P Global Platts estimate that U.S. crude stocks rose 1.9 million barrels in the week ended Oct. 28. Official data from the Energy Information Administration is due Wednesday.
The American Petroleum Institute, an industry group, said late Tuesday that its own data for the week showed a 9.3-million-barrel increase in crude supplies, a 3.6-million-barrel decrease in gasoline stocks and a 3.1-million-barrel decline in distillate inventories, according to a market participant.
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