Oil Prices Retreat as Supply Rises Ahead of 2017 Production Cut

Oil prices fell in early Asian trading as crude production in almost all major export regions despite a planned production cut by OPEC and Russia, raising fears that an oil glut that has persisted in the market for more than two years might extend into its third year in 2017.

International Brent crude oil futures traded down 39 cents at $54.44 per barrel, declining 0.7% from their last finish. Meanwhile, the U.S. WTI crude futures were down 47 cents or 0.9%, at $51.32 a barrel.

Traders said the decline in prices were caused by the increasing production from OPEC and Russia. The producer cartel's production has posted another record high in the previous month, scaling to 34.19 million bpd in November from the 33.82 million bpd in October. On Friday, Russia said its average daily production reached 11.21 million bpd last month, its highest daily output in nearly three decades.

Their combined output alone attributed for almost half of total global oil demand, which is currently at the 95 million bpd level.

The alarmingly high production figures comes just after OPEC and Russia struck a historic deal to cap output in 2017 which caused oil prices to rally, causing investors to worry that the planned cut will not be big enough to dent the oil glut.

News are provided by InstaForex