By Sarah Toy
Crude futures swung between small gains and losses on Tuesday after the Organization of the Petroleum Exporting Countries and its allies signaled they were planning to maintain their current curbs on crude output through next year, holding off on more aggressive cuts.
U.S. crude pared gains earlier in the day to fall 0.1% to $56.82 a barrel, while Brent, the global gauge of prices, fell 0.2% to $62.03 a barrel.
Shale companies are pushing U.S. oil and natural-gas production to record levels, adding to a glut that has held down crude prices for years. Some U.S. producers recently signaled that they are planning to pull back production in the coming year, but OPEC, locked in a years-long struggle with U.S. producers for pricing-power primacy, is wary they will follow through.
"There is always a risk that if we cut deeper and prices rise, those [U.S.] companies could change their plans to hike production," a Gulf OPEC delegate said. "OPEC would ensure that won't happen."
Some analysts are convinced that the cartel and its allies will eventually decide to pull production back more, pointing to Saudi Arabia's interest in pushing up prices ahead of the initial public offering of the state-owned Saudi Arabian Oil Co., or Aramco.
"[The Saudis] will want to have strong oil prices going into the final pricing of their IPO," wrote Edward Moya, senior market analyst at Oanda, in a Tuesday note.
During OPEC's December meeting, de facto leader Saudi Arabia is expected to pressure overproducing countries like Iraq and Nigeria to comply with the cartel's pact to cut collective production by 1.2 million barrels a day. That would effectively result in deeper oil-production cuts, which could help bolster prices.
Elsewhere in commodities, natural-gas prices pared gains from earlier in the day, falling 0.3% to $2.63 per million British thermal units.
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(END) Dow Jones Newswires
November 12, 2019 13:53 ET (18:53 GMT)
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