Energy shares fell after Saudi Arabia, the world’s largest oil exporter and the leading member for the Organization of Petroleum Exporting Countries, said a meeting in Algiers will be consultative and unlikely to reach a firm decision.
Advertisement
Saudi Arabia proposed to cut its production to January levels, Algerian Energy Minister Noureddine Boutarfa said on Sunday.
Russian Federation and members of the OPEC oil cartel led by Saudi Arabia will gather in Algeria for three days from Monday and are expected to discuss a stubborn oversupply that has depressed prices since 2014.
OPEC’s next meeting is November 30, but there have been talks about the possibility of calling an emergency meeting before that, she said.
On Friday, oil prices rose following a Reuters report that suggested Saudi Arabia had agreed to trim its production if Iran capped its own output.
“Iraq’s oil policy aims at cooperating with the producers inside and outside OPEC to achieve the needed balance in supply and demand and the stability in the market”, he added.
But an attempt at an output freeze deal between OPEC and Russian Federation collapsed earlier this year after the Saudis said Iran needed to contribute as production recovered following the end to Western sanctions in January. That said, given that Russian Federation has delivered record production volumes recently, capping at that level would not exactly help the oil market glut. That meeting marks OPEC’s third attempt this year to discuss stabilizing actions, which thus far have ended in failure.
Around 1615 GMT, US benchmark West Texas Intermediate for delivery in November was down $1.43 at $44.93 a barrel compared with Thursday’s close. “How can they decide a freeze when Libya is on the doorstep of returning production, or Nigeria for that matter?” According to analysts, there’s still a chance of a production freeze materializing in Algiers – just don’t expect it to be bullish for oil prices. Support came from data showing USA commercial inventories fell more than six million barrels last week, suggesting stronger demand in the world’s top oil-consuming country.
Energy shares led declines in US stocks, with the S&P energy index having lost 1.4 percent by late afternoon.
Brent crude futures settled down $US1.76, or 3.7 per cent, at $US45.89 a barrel. US crude supplies dropped to the lowest since February, trimming stockpiles that remain at the highest seasonal level in at least three decades, government data showed Wednesday.
Pre-sanctions levels would mean Iran would have to reach an output of four million barrels a day before the meeting in Algiers.
Advertisement
The price falls may also be related to an increase in crude supplies.
