Oil prices down as bear market drags after brief relief

Dec. 13 (UPI) -- Crude oil prices were lower early Thursday, as positive reactions to the OPEC plus non-OPEC announcement of production cuts appeared only a brief respite, with potential that prices may soon drop more and test lower levels.

West Texas Intermediate crude oil future prices fell 1.1 percent to $50.61 per barrel as of 8:40 a.m. EST, while Brent crude oil futures declined 0.8 percent to $59.68 per barrel as of the same time.

"From a technical perspective, this market wants to test the $48.50 per barrel area before this wreaking price trend will have a chance at reversing course, " John Thorpe, analyst at Cannon Trading, told UPI.

"Make no mistake, this is still a bear market," he said. There are concerns that OPEC may not be able to maintain a united production cut front, he added.

OPEC and non-OPEC nations agreed last week to a combined 1.2 million barrels per day production cut, with OPEC countries, led by Saudi Arabia, reducing 0.8 million barrels per day, and non-OPEC, led by Russia, the rest.

The decision to reach an accord came after extended negotiations, and at the end of a week where one OPEC member, Qatar, has pulled away from the organization after 57 years. Iran has publicly voiced its own, and allegedly other members, disagreements with Saudi Arabia, blaming the biggest producer in the group for trying to impose decisions, instead of seeking consensus with all members.

According to an International Energy Agency report issued Thursday, only "time will tell how effective the new production agreement will be in re-balancing the oil market." The comment came in a report where it questioned whether prices may or may not have reached a floor at current levels.

While oil price futures did see some increase in recent days, after the OPEC and no- OPEC accord was announced, there was an added effect from announcements in Canada and Libya that together may result in over 600,000 barrels per day coming off the market.

In the case of Canada, there are concerns about low prices and issues related to pipeline congestion that will lead to 325,000 barrel supply coming off the market. The cut takes effect next month.

As for Libya, its biggest field was occupied during the weekend by a militia, forcing the country's state oil company to shut down wells and evacuate personnel.

Before the OPEC meeting started last week, some traders said the market had already discounted a production cut of at least 1.1 million barrels per day.