Oil prices slip as market awaits output deal

Brent crude oil futures were down by 41 cents, or 0.9%, at $47.01 a barrel

  
Image used for illustrative purpose. The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019.

Image used for illustrative purpose. The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019.

REUTERS/Angus Mordant

LONDON- Oil prices slipped on Wednesday as the market awaited a pact from producers on output, although Britain's approval of a COVID-19 vaccine gave hopes for a demand recovery a boost.

Prices were hit by a surprise build in oil inventories in the United States and as OPEC and its allies created uncertainty with a two-day delay to a formal meeting to decide whether to increase production in January.

Brent crude oil futures were down 13 cents, or 0.3%, at $47.29 a barrel by 1332 GMT, while West Texas Intermediate crude was down 16 cents, or 0.4%, at $44.39.

Industry data from the American Petroleum Institute showed U.S. crude inventories rose by 4.1 million barrels last week, compared with analysts' expectations in a Reuters poll for a draw of 2.4 million barrels.

"Traders would not take huge gambles today, as they are waiting for the final verdict of Thursday’s OPEC+ meeting", said Rystad Energy's head of oil markets, Bjornar Tonhaugen.

"When stakes are so high, it is dangerous to move prices much ahead".

The Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies, a group known as OPEC+, postponed talks on next year's oil output policy to Thursday from Tuesday, according to sources. 

The group this year imposed production cuts of 7.7 million barrels per day (bpd) as the coronavirus pandemic hit fuel demand.

It had been widely expected to roll those reductions over into January-March 2021 amid spikes in COVID-19 cases.

But the United Arab Emirates (UAE) said this week that even though it could support a rollover, it would struggle to continue with the same deep output reductions into 2021. 

Britain on Wednesday became the first western country to approve a COVID-19 vaccine, jumping ahead of the United States and the European Union in what may be a first step toward a return to normal life and boost oil consumption. 

(Reporting by Noah Browning and Jessica Jaganathan; Editing by Ana Nicolaci da Costa, John Stonestreet and Louise Heavens) ((Jessica.Jaganathan@thomsonreuters.com; +65 6870 3822; Reuters Messaging: jessica.jaganathan.thomsonreuters.com@reuters.net; Twitter: https://twitter.com/j3ssi3))

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