Oil nudges lower after Saudi-fuelled bounce

13 August 2016 12:02 am - 0     - {{hitsCtrl.values.hits}}

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AFP - Crude prices slipped yesterday on profit-taking, following gains triggered by Saudi Arabia oil minister who hinted that producers could agree to limit production.


Around 1100 GMT, US benchmark West Texas Intermediate for delivery in September was down six cents at $43.43 per barrel.


Brent North Sea crude for October delivery fell 12 cents to $45.92 a barrel compared with the close on Thursday.


Rumours have been circulating that global producers are mulling a deal to freeze output at current levels to help stabilise the market. 


Saudi oil chief Khalid al-Falih was reported as saying Thursday that an informal meeting of Organization of Petroleum Exporting Countries (OPEC) countries next month would be the occasion for producers to discuss “any possible action”.


Prices soared more than four percent in reaction to the comments, which were seen as a positive development in a market grappling with a supply glut.


“Volatility levels on the oil market are currently extreme,” said Commerzbank analyst Carsten Fritsch.
“Prices are fluctuating by several percentage points on a daily basis, and are changing direction almost every day.”


Thursday’s rebound follows a drop in prices earlier this week after official US data showed a jump in crude inventories, taking by surprise investors who expected a drawdown in supply.
A monthly report from OPEC also showed Saudi Arabian oil production was at nearly 10.5 million barrels per day in July -- a record high, above peak levels seen the same time last year. But markets remain cautious.


Meetings earlier this year failed to agree on any production ceiling, as key crude producers preferred to fight for market share.


“Khalid al-Falih hinted at possible cooperation between OPEC and non-OPEC countries to curb production,” said CMC Markets analyst Alex Furber.
“The likelihood of such an event, however, is questionable, given that the market was teased in a similar way back in April.”


OPEC’s informal meeting will take place on the sidelines of the International Energy Forum in Algeria from September 26 to 28, ahead of a planned meeting due at the end of November.
Oil prices had entered a “bear” market last week on oversupply concerns, falling more than 20 percent and closing below $40 a barrel for the first time since April.
The International Energy Agency (IEA) meanwhile gave a mixed outlook for crude on Thursday.
The Paris-based IEA energy watchdog cut its 2017 forecast for oil demand growth because of a weaker outlook for the world economy following Britain’s vote to leave the European Union.
On the other hand, oil oversupply, which has again been weighing on crude prices since June, will disappear in the latter part of 2016, the IEA said.

Saudi oil chief Khalid al-Falih was reported as saying Thursday that an informal meeting of Organization of Petroleum Exporting Countries (OPEC) countries next month would be the occasion for producers to discuss “any possible action”. Prices soared more than four percent in reaction to the comments, which were seen as a positive development in a market grappling with a supply glut. “Volatility levels on the oil market are currently extreme,” said Commerzbank analyst Carsten Fritsch. “Prices are fluctuating by several percentage points on a daily basis, and are changing direction almost every day.”


Thursday’s rebound follows a drop in prices earlier this week after official US data showed a jump in crude inventories, taking by surprise investors who expected a drawdown in supply.
A monthly report from OPEC also showed Saudi Arabian oil production was at nearly 10.5 million barrels per day in July -- a record high, above peak levels seen the same time last year. But markets remain cautious. Meetings earlier this year failed to agree on any production ceiling, as key crude producers preferred to fight for market share.


“Khalid al-Falih hinted at possible cooperation between OPEC and non-OPEC countries to curb production,” said CMC Markets analyst Alex Furber.
“The likelihood of such an event, however, is questionable, given that the market was teased in a similar way back in April.” OPEC’s informal meeting will take place on the sidelines of the International Energy Forum in Algeria from September 26 to 28, ahead of a planned meeting due at the end of November. Oil prices had entered a “bear” market last week on oversupply concerns, falling more than 20 percent and closing below $40 a barrel for the first time since April. The International Energy Agency (IEA) meanwhile gave a mixed outlook for crude on Thursday. The Paris-based IEA energy watchdog cut its 2017 forecast for oil demand growth because of a weaker outlook for the world economy following Britain’s vote to leave the European Union. On the other hand, oil oversupply, which has again been weighing on crude prices since June, will disappear in the latter part of 2016, the IEA said.

 

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