Oil Trades Near $47 as Saudis See Freeze as Positive for Market
Oil traded near $47 a barrel as Saudi Arabia’s energy minister said an output freeze would be positive for the market and after a report that Iran will attend informal talks next month.
Futures lost 0.3 percent in New York after rising 1.2 percent Thursday. A freeze will signify that producers are content with the current market situation, Saudi Arabian Energy Minister Khalid Al-Falih said, ruling out an output cut. Iran will participate in the discussions in Algiers, a state news service reported. Oil suppliers want a deal to manage production, OPEC’s Secretary General Mohammed Barkindo told Arabic-language newspaper Al-Hayat.
Oil entered a bull market Aug. 18, less than three weeks after tumbling into a bear market. Prices surged partly on speculation that informal discussions among members of the Organization of Petroleum Exporting Countries may lead to action to stabilize the market. A deal to freeze output was proposed in February, but a meeting in April ended with no final accord.
“While an agreement to limit production at current levels would largely be a symbolic gesture, judging by the market reaction to the announcement of these talks that might be enough to keep prices firm,” said Michael McCarthy, a chief market strategist in Sydney at CMC Markets. “The overhanging inventories and the agility of the U.S. shale producers will limit the topside to somewhere around $55 to $60 a barrel.”
West Texas Intermediate for October delivery was at $47.21 a barrel on the New York Mercantile Exchange, down 12 cents, at 7:50 a.m. in London. The contract rose 56 cents to $47.33 on Thursday. Total volume traded was about 68 percent below the 100-day average. Prices are down 2.7 percent this week.
Brent for October settlement was 23 cents lower at $49.44 a barrel on the London-based ICE Futures Europe exchange. The contract increased 62 cents, or 1.3 percent, to $49.67 on Thursday. Prices are down 2.8 percent this week. The global benchmark crude traded at a $2.24 premium to WTI.
- Iranian Oil Minister Bijan Namdar Zanganeh will attend the talks in Algiers, according to Iran’s oil ministry news service Shana.
- PetroChina Co. cut its domestic crude output target for 2016 by 2.8 percent after some high-cost fields were shut down because they couldn’t make a profit at current oil prices, according to President Wang Dongjin.