Oil Holds Near $57 as Investors Weigh OPEC Plans And IEA Warning

Oil falls after Russia preaches patience rather than production cuts

West Texas Intermediate for January delivery traded at $56.37 a barrel on the New York Mercantile Exchange, down 83 cents, at 8:18 a.m. local time.

Weekly exchange data shows money managers hold a combined net long position equivalent to around 364 million barrels of US and Brent crude futures and options, down from over 800 million barrels two months ago.

Crude markers in NY and London have both fallen more than 20 percent from their October highs on concerns over a supply glut after the US granted waivers to some countries to buy Iranian oil despite sanctions. "The market expects OPEC to set the direction and play the role of swing producer again even as American production rises".

While Saudi Arabia's Energy Minister Khalid al-Falih says that based on the OPEC+ group technical analysis, "there will need to be a reduction of supply from October levels approaching a million barrels", reports emerged last week that Russian Federation would rather stay out of any fresh oil production cuts led by the Saudis.

Potential sanctions from the European Union would come as the United States has granted waivers to some of Iran's oil customers, muting the policy's expected impact on global supplies. An oversupplied crude market next year will help the US cut Iranian sales further as President Trump targets the country's main source of income, a State Department official said. The contract closed 3 cents higher at $66.79 on Monday. The December contract settled up 0.5 percent on Monday and has expired.

The group and its allies are considering cutting production by more than 1 million barrels a day as they're increasingly anxious about the potential for oversupply, people familiar with the matter said. Total volume traded Tuesday was 40 percent above the 100-day average.

In other news, USA energy firms added two oil rigs in the week to November 16, bringing the total count to 888, the highest level since March 2015, according to energy services firm Baker Hughes.

On U.S. -China trade war front, U.S. President Donald Trump said recently that China wants to make a deal on trade with the United States, but any pact has to be reciprocal. With signs of economic and oil demand growth slowing, the market may be expecting an announcement of a sizeable output reduction in early December, and could be bitterly disappointed should OPEC fail to live up to this expectation. The official crude inventory data from U.S. Energy Information Administration will be out at 10:30 AM on Wednesday.

Oil prices dropped sharply on Tuesday (Nov 20), snapping a four-day winning streak amid concerns about rising global supplies as OPEC weighs a possible cut in production.

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