Oil prices slipped from multi-month highs to end more than 1% lower on the first trading day of the year after OPEC+ failed to decide on Monday whether to increase output in February and agreed to meet again on Tuesday.
Brent futures settled 71 cents, or 1.4%, lower at $51.09 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 90 cents, or 1.9%, to settle at $47.62.
Earlier in the session, WTI hit its highest since February and Brent its highest since March. The premium of Brent over WTI reached its highest since May.
The S&P 500 and the Dow also fell from record levels as President Donald Trump travels to Georgia in a bid to keep the U.S. Senate in the hands of his Republican Party ahead of Tuesday’s run-off election in the battleground state.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, will resume talks on Tuesday after reaching a deadlock over February oil output levels as Saudi Arabia argued against pumping more due to new coronavirus lockdowns while Russia led calls for higher production citing recovering demand. [nL1N2JF0I6]
“Anything can happen, but Russia may not want to lose face and capitulate so easily. It looks like we may be in for some lengthy negotiations,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
In Europe, England was set for a new lockdown to try to slow a surge in COVID-19 cases that threatens to overwhelm parts of the health system, while Germany was weighing whether to allow a delay in administering a second dose of the COVID-19 vaccine to make scarce supplies go further.
In the Middle East, meanwhile, the news was mixed.
Oil prices gained some support earlier in the day after Iran’s Revolutionary Guards seized a South Korean-flagged tanker in Gulf waters and Iran resumed uranium enrichment at an underground nuclear facility.
But later in the day Kuwait’s foreign minister said Saudi Arabia will reopen its airspace and land and sea border to Qatar as of Monday as part of a deal seeking to resolve a political dispute that led Riyadh and its allies to impose a boycott on Qatar.
Source: Reuters (Reporting by Scott DiSavino; Additional reporting by Bozorgmehr Sharafedin in London and Florence Tan in Singapore; Editing by Marguerita Choy, Barbara Lewis and Alexander Smith)