Brent crude futures jumped nearly 5 percent late on Monday afternoon before a news conference at which the two countries announced their agreement, but by Tuesday morning they have given up most of those gains, standing at $47.71 a barrel.
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In Asia, crude oil for October delivery on the New York Mercantile Exchange jumped 1.37% to $45.05 a barrel.
TOKYO-Brent crude prices were steady on Tuesday, holding most of their gains from the previous session when top producers Russian Federation and Saudi Arabia agreed to cooperate on stabilizing the oil market.
The global benchmark on Monday hit a near one-week high of $49.40 after the Russia-Saudi news, but has since pared gains after Saudi Energy Minister Khalid al-Falih said there was no need now to freeze production.
As you know Saudi Arabia did not rule out the possibility of freezing outputs and discussions were ongoing for a long time on this issue.
Trade volumes were expected to remain light on Monday, with many investors in the US away for the Labor Day holiday.
“The two nations’ cooperation is understandable”, said Kaname Gokon, a strategist with Okato Shoji Co Ltd. “There is still a question whether they can cut production for a sustainable period”. Novak told Russian media an agreement under discussion would freeze oil output for up to six months at levels seen in July, August or September.
Several OPEC producers have called for an output freeze to rein in the glut, which arose as supplies from high-cost producers such as the United States soared.
The countries, which together hold more than 21% of the world’s oil supply, said they will hold the first Russia-Saudi working group meeting next month, in addition to regular meetings in Algeria in September and the OPEC meeting in November, in Vienna.
The previous attempt at reaching a deal in April were scuppered by Opec member Iran’s refusal to agree to any output freeze, and there are worries about the chances of an agreement being reached in Algiers.
It came as the Organisation of Petroleum Exporting Countries’ secretary general, Mohammed Barkendo, and Iran’s oil minister, Bijan Zanganeh met today in Tehran to discuss global oil market conditions and crude prices.
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