Crude oil prices have drifted lower in recent sessions amid doubts about any meaningful decision from major oil producers planning to meet next month in Algeria.
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The reasons remain the same as to why oil prices slumped on Monday: a stronger greenback buoyed by Fed Chair Yellen’s speech last Friday, waning hopes of an output freeze and worries about additional production from the Middle East and Africa.
Iranian Oil Minister Bijan Zanganeh said his country wanted its pre-sanctions share of the crude market, in comments that suggested Tehran might not be on board with efforts in the OPEC cartel to agree on an output cap together with Russian Federation.
On the ICE Futures Exchange in London, Brent oil for November delivery inched up 21 cents, or 0.42%, to trade at $49.66 a barrel by 3:55AM ET (07:55GMT), after falling 70 cents, or 1.4%, on Monday.
Iraq’s state-run North Oil Company resumed pumping crude through the Kurdish-controlled pipeline to Turkey earlier this month as “a sign of goodwill” to invite the Kurds to start negotiations, Deputy Oil Minister Fayadh al-Nema said in an interview with Reuters on Friday.
“Today is just another economic story that’s fed the dollar’s strength and with the weekly build expected in US crude, prices are getting a double whammy”, said Tariq Zahir, a trader in WTI timespreads at Tyche Capital Advisors in NY. The global benchmark crude dropped 1.8 percent on Tuesday. The latest drop was mostly attributed to a rising US dollar and an expected buildup in USA crude oil inventories.
Iraqi Prime Minister Haider al-Abadi announced on Tuesday that the country would support a freeze in oil production during the next meeting of the Organization of Petroleum Exporting Countries (OPEC) in September.
Despite a rebound this year, oil trades at less than half of mid-2014 peaks above $100 due to glut fears.
The expert stressed that OPEC’s mission is to stabilize the market and the price protection at any level secures the market. Saudi Arabia produced 10.5 million barrels per day in July, an increase of 30,000 from June and a new all-time record.
Oil prices had rallied in August on hopes that Russian Federation and the Organization of the Oil Exporting Countries could agree to limit production when they meet in Algiers on September 26-28.
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The steep decreases in oil export revenue are expected to have a significant impact on the economies of countries that rely heavily on oil sales and lack large financial reserves.
