WASHINGTON (dpa-AFX) - Despite the latest data from the Energy Information Administration showing a drop in U.S. crude stockpiles last week, oil prices drifted lower on Thursday as the OPEC postponed a decision about output reduction to Friday.
Escalation in U.S.-China trade tensions following the arrest of Huawei Technologies Co.'s Chief Financial Officer Meng Wanzhou in Canada, has raised fears that the two countries may not find a solution to their trade disputes anytime soon. A prolonged trade war between the two countries will significantly slow down global economic growth and result in a notable drop in demand for crude.
Crude oil futures for January ended down $1.40, or 2.7%, at $51.49 a barrel, after declining to a low of $50.11 a barrel. On Wednesday, crude oil futures ended down $0.36, or 0.7%, at $52.89 a barrel.
Crude oil inventories in the U.S. fell for the first time in 11 weeks, declining by 7.3 million barrels to 443.2 million barrels, in the week ended November 30, data from the Energy Information Administration showed.
The much anticipated meeting of the members of the Organization of the Petroleum Exporting Countries (OPEC) on Thursday ended without an announcement about the quantum of production cuts.
According to Russian news agency TASS, OPEC members reached 'preliminary agreement' following talks in Vienna to cut oil production, but specifics on the amount to be cut have not yet been decided.
Reports indicate that a decision on production cuts will be taken when the OPEC members meet the non-member crude producers, including Russia, tomorrow. Recently, Qatar said it will be leaving OPEC on January 1, 2019.
It was speculated earlier that the OPEC will agree on a production cut of 1.4 million barrels a day although Saudi Arabia was said to be keen on reducing output by just 1 million barrels. However, it is now being speculated that the size of production cut may not be big enough to pull crude oil prices up any significantly from current levels.
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