London: Oil prices fell below $43 (about Rs2,116) on Tuesday as the market awaited a report from the US energy department for clues on the state of demand in the country and looked ahead to next week’s meeting of the Organization of the Petroleum Exporting Countries (Opec). It broke six straight sessions of losses on Monday, jumping 7% with a rally in equity markets and after signs key supplier Saudi Arabia would cut supplies.
Opec meets on 17 December in Algeria and is widely expected to reduce overall production by 1-1.5 million barrels per day (bpd) as it steps up efforts to halt the steep slide in prices.
US crude for January delivery was down 18 cents at $43.53 a barrel at 1155 GMT, after surging $2.90 to settle at $43.71 a barrel overnight—a rebound from a 25% drop last week that was the biggest weekly fall in 18 years. London Brent crude fell 40 cents to $43.02 a barrel.
“Oil is on a countdown to Opec now and everyone is expecting them to come up with something big—probably a cut of 1-1.5 million bpd,” said Rob Laughlin, senior oil analyst at brokers MF Global in London. “If Opec doesn’t make a big cut, this market is in trouble.”
Oil demand is falling across developed economies but analysts expect producers to act to stem the collapse in oil markets that has seen prices lose two thirds of their value from a record $147 a barrel in July.
Saudi Arabia, which has cited $75 a barrel as a “fair price” for oil, will make bigger supply cuts to some of its Asian and European customers next month. Opec has already agreed to cut about 2 million bpd of output to support prices, and members are leaning towards more cuts.