Oil falls on output cut skepticism, OPEC and Russia output rise | Reuters

By Scott DiSavino | NEW YORK NEW YORK Oil prices on Tuesday ended lower for the first time in a week since OPEC agreed to cut output on growing skepticism that the cartel would be able to reduce supplies as data showed record high production in most major export regions. After rising over 15 percent over the four sessions since the Nov. 30 OPEC meeting, Brent futures lost $1.01, or 1.8 percent, to settle at $53.93 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 86 cents, or 1.7 percent, to $50.93 per barrel.“Prices fell for the first day in five in reaction to news that OPEC’s output hit a record high last month,” said James Williams, president of energy consultant WTRG Economics in Arkansas.Williams said OPEC would probably do a “pretty good job” in January of keeping to the quotas they agreed to last week but would probably start cheating on those quotas in February or March.OPEC’s output set another record high in November, rising to 34.19 million barrels per day (bpd) from 33.82 million bpd in October, according to a Reuters survey. As part of last week’s decision, OPEC said major oil producers outside the group would cut 600,000 bpd of production on top of OPEC’s 1.2 million bpd reduction. Those countries and OPEC meet this weekend to finalize the terms.Russia reported average oil production in November of 11.21 million bpd, its highest in nearly 30 years. That means OPEC and Russia alone produced enough to cover almost half of global oil demand, which is just above 95 million bpd.Market watchers had said OPEC’s decision to cut output marked an about-face for Saudi Arabia, which has been battling to keep market share for the past two years by selling more, if cheaper, barrels rather than bolstering prices. But in a sign the fight for market share is not over, Saudi Aramco cut the January price for its Arab Light grade for Asian customers by $1.20 a barrel from December.Meanwhile, Glencore chief Ivan Glasenberg reflected some fears in the market when he said prices could drop to $35 should U.S. shale producers ramp up their output though he hoped they would be “responsible.” The U.S. Energy Information Administration (EIA) expects U.S. crude production to fall less than previously expected to 8.9 million bpd in 2016 and to 8.8 million bpd in 2017 from 9.4 million bpd in 2015, according to its monthly short term energy outlook.Analysts, meanwhile, forecast U.S. crude inventories fell by 1 million barrels last week. [EIA/S]The American Petroleum Institute (API) is set to release U.S. inventory data at 4:30 p.m. EST (2130 GMT) on Tuesday, while the U.S. EIA will release its petroleum report at 10:30 a.m. EST on Wednesday. (Additional reporting by Sabina Zawadzki in London, Henning Gloystein in Singapore and Polina Devitt and Anastasia Lyrchikova in Moscow; Editing by Marguerita Choy and Meredith Mazzilli)

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