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US Crude Stays Flat on Thanksgiving Holiday

November 24, 2016 at 18:11 by Andrew Moran

US crude stayed relatively flat on Thursday as US markets were closed for the Thanksgiving holiday. Oil prices also barely nudged as global traders are taking a wait-and-see approach ahead of the upcoming Organization of Petroleum Exporting Countries (OPEC) crude production cut meeting.

January West Texas Intermediate (WTI) crude futures fell $0.02, or 0.04%, to $47.96 per barrel at 16:46 GMT on Thursday on the New York Mercantile Exchange. US crude has been on a roller coaster ride since OPEC agreed to cap oil output levels at an informal meeting in Algiers in September. Oil has regularly dipped below and went above the important $50 threshold for two months now.

Brent crude has also remained still. January Brent crude futures tumbled $0.01, or 0.02%, to $48.94 a barrel on London’s ICE Futures exchange.

Since hitting a 12-year low in February, oil prices have soared about 70%.

Investors are apparently not making any new bets on Thursday due to the Thanksgiving holiday and uncertainty regarding OPEC’s future production cut.

The oil cartel is scheduled to hold a meeting on November 30 to coordinate a production cut, which could happen alongside non-OPEC member Russia. If a global production freeze is agreed upon then Russia could slash its output levels by between 200,000 and 300,000 barrels per day (bpd). Meanwhile, OPEC may urge other producers to also cut their oil output by as much as 880,000 bpd for six months.

Reports suggest that the production cap could begin as soon as January 1, 2017.

According to the International Energy Agency (IEA), it is likely that some type of production cut will be agreed upon. Some analysts, however, are concerned that it may not be enough to combat the oversupply of oil that has been prevalent for roughly two years. If OPEC is able to lead a significant output reduction then this would simply encourage US shale oil drillers to increase their own output, which would also cause oil to decline once again.

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