NEW YORK (MarketWatch) -- Crude-oil futures traded lower early Wednesday, as investors awaited an official announcement on a production cut from the Organization of Petroleum Exporting Countries.
Crude for January delivery fell 35 cents to $43.25 a barrel in electronic trading on Globex.
"Market participants have turned to expecting a 2-million-barrel-a-day cut," said Nimit Khamar, analyst at Sucden Financial.
"If this figure of 2 million barrels a day is already priced in, then the short/ medium-term price outlook is weak based solely on OPEC actions," Khamar said.
The Organization of Oil Exporting Countries began a key meeting on Wednesday with Saudi Arabia's oil minister reportedly saying that cartel members have already agreed on a cut of about 2 million barrels a day. See full story.
Speaking ahead of Wednesday's OPEC meeting in Oran, Algeria, Saudi Arabia's Ali Naimi added the kingdom is now producing 8.2 million barrels of crude oil a day, according to a Dow Jones Newswires report.
Russia, which isn't an OPEC member, will attend the cartel's meeting as an observer and is expected to announce proposals for a reduction in Russian output. Russia is the world's second biggest oil producer after Saudi Arabia.
"The erratic price reaction leading up to the OPEC/Russian decisions ... may be expressing the market's skepticism with regard to OPEC's ability to enforce its cuts," said Edward Meir, an analyst at MF Global, in a research note.
"Although the cartel could potentially remove much of the global excess in crude with a cut of 2 million barrels a day, participants wants assurance that the oil does not seep back into the system through cheating," Meir said.
On Tuesday, the benchmark crude contract closed down 2%, reversing course after having soared as high as $46.53 a barrel in early trading.
Traders are also awaiting separate weekly updates on U.S. petroleum supplies due at 10:35 a.m. Eastern Wednesday from the Energy Information Administration and the American Petroleum Institute.
Analysts expect a 900,000-barrel decline in U.S. commercial crude stocks as well as a rise of 1.5 million barrels in gasoline stockpiles during the week ended Dec. 12, according to a Platts survey. Distillate stocks were expected by analysts to increase 1.8 million barrels, the survey said.
Also on Globex, January reformulated gasoline was flat at $1.04 a gallon and January heating oil added 3 cents, or 2%, to $1.49 a gallon.
January natural gas futures gained 3 cents to $5.79 per million British thermal units.
