Dec. 5 (UPI) -- With OPEC settled in for the year and a downturn in global inflation, a lack of buyers in the market pulled oil prices sharply lower early Tuesday.
With much fanfare, but with few surprises, the Organization of Petroleum Exporting Countries, with support from Russia, agreed last week to extend a production cut agreement until the end of 2018. The effort, which began in January, is meant to drain the surplus on the five-year average in global crude oil inventories and ministers said from Vienna last week they're only halfway to their goal.
Analysts surveyed by commodity pricing group S&P Global Platts said they expected the U.S. to show a 4.1 million barrel drain on crude oil inventories, which would normally support a rally for crude oil prices. Ole Hansen, the head of commodity strategy at Saxo Bank, told UPI, however, there was a glut of bullish bets ahead of OPEC's meeting last week and now there was "some buying fatigue in the market."
"The expected reduction in oil stocks due to increased refinery demand is not expected to translate into higher demand and lower overall U.S. stocks of oil and products," he added.
About an hour before the start of trading in New York and crude oil prices are setting up for a rough day. The price for Brent crude oil was down 0.22 percent to $62.30 per barrel as of 8:45 a.m. EST. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.6 percent to $57.16 per barrel.
Geoffrey Craig, the oil futures editor for Platts, said now that OPEC has decided its fate, traders are turning their attention away from rhetoric toward market fundamentals. If its estimate is correct, he added, it might to "too neutral" to break oil prices out of their current range.
"Some observers see OPEC's supply cuts as having been undermined by U.S. production, which has risen by 983,000 barrels per day over the last year to a record-high 9.682 million barrels per day," he added in emailed comments.
Elsewhere, analysts at the Organization for Economic Cooperation and Development said annual inflation for the world's industrialized economies slowed to 2.2 percent in October, compared with a 2.3 percent gain in September.
OECD Secretary General Angel Gurria said last week that global growth is accelerating from 3.1 percent in terms of gross domestic product last year to 3.6 percent in 2017. Nevertheless, growth is lopsided, wages aren't keeping pace with the economy, household debts are rising and "danger signs are flashing" for some real estate markets, he warned.