Prices had rebounded last week on hopes that OPEC and non-OPEC producers such as Russian Federation would agree to freeze output levels.
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The outcome of the Sunday summit of 18 oil exporters summit was “disappointing, but not a surprise” because Iran wasn’t involved in the talks and Saudi Arabia insisted on Iran’s inclusion in the freeze, Rumhy said. Negotiations among 16 oil producers in Doha on Sunday ended without any accord after Saudi Arabia demanded all producers take part in a freeze. India is one of the biggest beneficiaries of low crude oil price as it depends heavily on imported crude to run the country. The ETF seeks daily investment results that correspond to two times (200%) the inverse of the daily performance of the NYMEX light sweet crude oil futures contract for the next delivery month. “To put things in perspective, four years ago when the average price of petrol was 142p and diesel was 148p, a barrel of oil cost 120 U.S. dollars a barrel, so fortunately we are a long way from seeing those bad times again”.
The oil market will remain oversupplied in the near term and the potential to test the 1999 lows of $9 per barrel is very real, Sam Barden believes.
Novak said last week he was “optimistic” that major producers would agree to hold output steady in an effort to stimulate a depressed oil economy.
The Minister noted that once every member country of OPEC is brought on board, it would become easier to convince other major oil producers to sign-up to the freeze policy which is created to remedy lingering decline in the price of crude oil in the worldwide market.
Natixis oil analyst Abhishek Deshpande told Reuters news agency that the markets’ confidence in OPEC’s ability to stabilize oil prices would “diminish”, which could have severe consequences. Saudi Arabia said it wouldn’t back a deal if regional rival Iran, which is trying to ramp up output as global sanctions are lifted, wasn’t involved.
USA crude oil was trading $1.88 lower at $38.48 a barrel by mid-afternoon in electronic trading on the New York Mercantile Exchange.
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On the other side of the Atlantic, Nymex May West Texas Intermediate fell more than 7 per cent to $37.61 before recovering to trade down just 1.5 per cent at $39.77. The breakdown of talks will nearly certainly lead to another rout in oil prices over the next few weeks – but the pain could be short-lived.
