Oil prices fell amid fresh worries about OPEC’s ability to coordinate a production cut, and a broader selloff Friday afternoon on the prospect of a new chapter in the Federal Bureau of Investigation’s investigation into Democratic presidential candidate Hillary Clinton’s email server.
The FBI has uncovered and is reviewing new evidence in the previously closed investigation. The news rattled markets and sent stocks, currencies and commodities lower.
“Oil prices just got washed out with the tide of generalized selling,” said John Kilduff, founding partner of Again Capital. “It’s unsettling for the markets.”
“The market senses no progress, whereas before they gave it some probability that OPEC may come to an agreement,” said Andy Lipow, president of Lipow Oil Associates.
U.S. crude for December delivery fell $1.02, or 2.05%, to $48.70 on the New York Mercantile Exchange. Brent crude, the global oil benchmark, fell 76 cents, or 1.51% to $49.71 a barrel on London’s ICE Futures exchange.
OPEC’s tentative deal to cut production has buoyed prices since September. But the rally has flagged over uncertainty about the execution of the plan. West Texas Intermediate, the U.S. benchmark, ended the week down 4.23%.
OPEC is expected to make a formal announcement on Nov. 30 on the fate of the deal.
Recently Iraq has been lobbying to get an exemption from the deal because of disruptions from the Islamic State insurgency.
OPEC members Iran, Nigeria and Libya have already secured exemptions from the agreement because they have faced petroleum-output disruptions.
The consequences if OPEC fails to agree are substantial, so some analysts are anticipating a basic deal.
It could be a “watered down” version, compared with the original proposal of curbing the group’s production by 200,000 to 700,000 barrels a day, said BMI Research.
For example, all parties could end up agreeing to freeze their production at their peak output level instead of scaling back, with the exceptions of Libya, Nigeria, and Iran, who could be allowed to ramp up until they reach their normal production levels.
“If they will fail to deliver in November, the market will sell off very hard and I think they know that,” said Amrita Sen, chief oil analyst at Energy Aspects. “They can’t keep kicking the can down the line.”
Gasoline futures fell 1.8 cents, or 1.21%, to $1.4691 a gallon. Diesel futures fell 2.79 cents, or $1.78%, to $1.5422 a gallon.