A meeting of oil producers to discuss a global deal to freeze production levels will likely take place in April, Russian energy minister Alexander Novak said Monday.
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WTI slumped 3.4 percent and Brent eased 2.1 percent on Monday, giving up gains that saw the global benchmark break US$40 a barrel for the first time this year. U.S. crude was up 62 cents at $39.08 a barrel.
The evolving position emerged after Qatar said Wednesday that it would host a meeting on April 17 in Doha for oil producers both inside and outside the Organization of the Petroleum Exporting Countries, the cartel that controls a third of the world’s crude production. While an exemption for Iran is not ideal, it is not a deal breaker, Opec sources said.
Saudi Arabia kept its crude oil production steady in February at just above 10 million barrels per day (bpd), suggesting the world’s biggest oil exporter is keeping to its preliminary deal with other producers to freeze output.
The proposed freeze “put a floor under the oil under the oil prices”, Qatari Oil Minister Mohammad Al-Sada said in an e-mailed statement today.
USA crude futures were 14c lower at $37.04 a barrel at 2.29am GMT.
Commenting on the output freeze plan, the Iranian government’s spokesman, Mohammad Bagher Nobakht has said “the move means that they don’t want to recognize Iran’s right to revive its pre-sanctions output”.
But continuously high production figures mean that global output still exceeds demand by at least 1 million bpd, weighing on markets.
“I remain sceptical on any such supply talks as the probability of any definitive action is unlikely to be high”, said analyst Bernard Aw at IG Markets in Singapore.
Stockpiles at the Cushing, Oklahoma grew nearly 850,000 barrels to 69.6 million in the week to March 11, bringing storage at the delivery hub for US crude futures to near capacity, traders said, citing market intelligence firm Genscape.
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A weaker dollar after the Fed decided against an interest rate increase on Wednesday also provided support to prices as it makes the commodity cheaper for clients using other currencies.
