Oil prices edged higher on Monday, supported by a rebound in other asset classes after news that U.S. presidential candidate Hillary Clintonwill not face charges over her emails, but gains were capped by a rallying dollar and doubts over OPEC’s planned production cuts.
U.S. crude futures were also supported by a weekly drop of 442,077 barrels of oil at the U.S. delivery hub in Cushing, Oklahoma for the week ended Nov. 4, according to traders citing energy monitoring service Genscape.
U.S. West Texas Intermediate (WTI) crude settled up 82 cents, or 1.9 percent, at $44.89 a barrel for its first positive settle in seven sessions.
The Federal Bureau of Investigation said it would not press charges against Clinton over her use of a private email server. That indicated worse prospects for Republican candidate Donald Trump, whose stance on foreign policy, trade and immigration have unnerved the market.
“There’s a little bit less of a concern about the economy falling apart,” said Phil Flynn, analyst at Price Futures Group in Chicago.
U.S. stocks soared on Monday, a day before the U.S. presidential election, while the dollar strengthened on news of Clinton’s improved prospects, making greenback-denominated crude more expensive for holders of other currencies.
Organization of the Petroleum Exporting Countries Secretary-General Mohammed Barkindo on Monday reiterated the cartel’s commitment to a deal to cut output made in Algiers late September, which sought to boost prices after two years of oversupply.
“We as OPEC, we remain committed to the Algiers accord that we … put together. All OPEC 14 (members), we remain committed to the implementation,” Mohammed Barkindo told reporters at a conference in Abu Dhabi.
OPEC has also sought cooperation from non-member producers, including Russia, but many analysts doubt its ability to coordinate a cut sufficient to balance the market.
“Market belief that OPEC can reach a credible deal has collapsed and prices are now $8 a barrel off the post-Algiers highs,” David Hufton, managing director of PVM Oil Associates, said in a note.
He cited record OPEC production in October, infighting between Iran and Saudi Arabia, as well as calls from Iraq for its own exemption from any cut.
“The numbers show that the best deal OPEC are likely to come up with is well short of what is needed to achieve a balanced market in 2017,” Hufton said.
Oil futures posted their biggest weekly percentage decline since January last week with Brent falling as low as $45.08, its weakest since Aug. 11, and WTI hitting $43.57, its lowest since Sept. 20.
There are also risks that the oil glut, which has dogged markets for over two years, could continue as OPEC’s de-facto leader Saudi Arabia threatened to increase production.
Even if Saudi Arabia does not follow through on that threat, its exports could rise.
“Saudi local oil demand is falling, and just maintaining current output could imply higher exports,” Barclays bank said.
There were also signs of rising future U.S. output as the number of drilling rigs looking for new oil rose by nine to 450 in the week to Nov. 4, the highest level since February.