- Venezuela proposed summit to address slump in crude prices
- Expanding Atlantic supplies seen adding pressure on market
Oil declined for a second day after another Russian official ruled out cooperation on production cuts with OPEC, adding to signs that a global oversupply will persist.
Brent lost 4 percent in London. Russia won’t join the Organization of Petroleum Exporting Countries and isn’t able to cut production in the same way, said OAO Rosneft Chief Executive Officer Igor Sechin. Russia’s Deputy Prime Minister Arkady Dvorkovich said last week there is no way the country can artificially reduce supply.
Oil has fluctuated the past three weeks as concerns over slowing demand in China fueled volatility in global markets. Prices are down more than 25 percent from this year’s closing peak in June on signs the surplus will persist. OPEC members are sustaining output and U.S. crude stockpiles remain almost 100 million barrels above the five-year seasonal average.
“Russia’s comments on the market are having some impact on prices today,” Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB, said by phone. “There’s some positive data coming from U.S. rig counts for example, and that could be positive for oil prices this week.”
Brent for October settlement lost $1.98 to settle at $47.63 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $3.37 to West Texas Intermediate. Prices have decreased 17 percent this year.
WTI for October delivery dropped $1.79, or 3.9 percent, to $44.26 a barrel on the New York Mercantile Exchange. The contract slid 70 cents to $46.05 on Friday. The volume of all futures traded was about 74 percent below the 100-day average. All electronic transactions Monday, when trading was halted at 1 p.m., will be booked with Tuesday’s for settlement purposes because of the Labor Day holiday.
Venezuelan President Nicolas Maduro told state-owned broadcaster Telesur he had proposed a summit of oil producers including Russia to address the price slump. The Venezuelan president and his Russian counterpart Vladimir Putin agreed on “initiatives” to bring stability to the market, Venezuela’s state-run news agency AVN said last week. Rosneft’s Sechin said Monday in Singapore that Russia could take on an “observer status” within OPEC.
Expanding crude supplies from the Atlantic basin are likely to add pressure on oil prices, according to analysts at Natixis SA and Macquarie Capital Inc. Production from the North Sea and Nigeria is set to reach its highest level in more than three years next month, according to data compiled by Bloomberg.
The Shanghai Composite Index closed 2.5 percent lower at 3,080.42, erasing an earlier 1.8 percent advance. Mainland markets were shut for a two-day holiday at the end of last week.
Senior Chinese officials signaled confidence in their economy’s underlying solidity. The rout in equities is close to ending and state intervention prevented systemic risk and stopped a free-fall, according to a statement from Zhou Xiaochuan, governor at the People’s Bank of China.
WTI at $45 a barrel is “killing” U.S. oil producers, Amrita Sen, chief oil analyst at Energy Aspects Ltd., said at a conference Monday in Singapore. Prices will be volatile and may overshoot to the upside in 2017 and 2018, Sen said.
Drilling rigs targeting oil in the U.S. dropped by 13 to 662, Baker Hughes Inc. said on its website Friday. That’s the first decline in active machines since the week ended July 17.
Hedge funds reduced short positions in WTI by 13 percent in the week ended Sept. 1 after the largest three-day rally in 25 years. It was the biggest liquidation of bearish bets since May, according to U.S. Commodity Futures Trading Commission data. Bullish bets on Brent crude were little changed at 140,660 contracts, according to ICE data.