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Oil prices slip, OPEC doubts offset U.S. rig count decline

Published 28/10/2016, 19:24
© Reuters. File photo of Lukoil-owned Imilorskoye oil field outside West Siberian city of Kogalym
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By Ethan Lou

NEW YORK (Reuters) - Oil prices fell below $50 on Friday and were poised for their biggest weekly loss in six weeks on doubts over OPEC's planned output cut, even as data showed U.S. oil drillers cut rigs for the first time since June.

Data by oil services company Baker Hughes Inc (N:BHI) showed U.S. oil drillers cut two rigs this week, ending a 17-week recovery in the rig count.

But the market's attention remained on disagreements at a meeting in Vienna of the Organization of the Petroleum Exporting Countries (OPEC), said James L. Williams, energy economist at WTRG Economics in London, Arkansas.

"A two-rig count is not significant one way or another. That could just be somebody moving rigs," he said. "All of the focus prices-wise is on the OPEC meeting right now ... I don't think we're going to get any positive news just yet."

Oil prices also slumped on news that the FBI had found additional emails relating to Democratic presidential nominee Hillary Clinton's past use of a personal email server for her work as U.S. secretary of state. The U.S. stock market dropped sharply, while the dollar rallied.

Brent crude futures (LCOc1) were down more than 2 percent at $49.42 a barrel by 2:10 p.m. EDT (1841 GMT).

U.S. West Texas Intermediate (CLc1) crude fell 2.4 percent to $48.53 a barrel.

The benchmarks are set to show at least a 3 percent drop for the week, the biggest loss since mid-September.

OPEC officials and counterparts from non-member producers such as Russia started two-day negotiations on Friday in the Austrian capital on limiting output to curb a global glut that has weighed on markets for two years.

As of late Friday in Vienna, officials had yet to agree on details on the plan to reduce output to between 32.5 million and 33 million barrels per day, with Iran opposing, sources said.

Russia, which has postponed its own domestic production-cut meeting, expects a quick recovery in U.S. shale oil activity so that an output freeze could be shortlived, Interfax news agency reported.

Prices jumped as much as 13 percent after Sept. 27, when OPEC announced its first planned output reduction in eight years. The cartel is expected to meet on Nov. 30 to discuss how much each individual member should cut.

Russia will organise a gathering of domestic oil producers a week before the OPEC meeting, industry sources said.

© Reuters. File photo of Lukoil-owned Imilorskoye oil field outside West Siberian city of Kogalym

A source close to one of the companies said the meeting had been postponed beyond Nov. 9 after discussions involving Igor Sechin, who heads Russian state producer Rosneft and is known for his anti-OPEC stance.

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