- Rising Iranian output dims prospects of action: Dana Gas CEO
- Stability should be achieved soon for oil market: Al Mazrouei
Oil declined amid doubts that producers will agree on a deal to stabilize the market when global suppliers meet next month for informal talks.
Futures decreased 1.4 percent in New York. Iran’s plan to continue boosting crude output until it regains its pre-sanctions OPEC market share is dimming prospects of collective action, according to Patrick Allman-Ward, chief executive officer of Dana Gas PJSC. United Arab Emirates Oil Minister Suhail Al Mazrouei said in a Twitter post that the oil market should achieve stability soon. The dollar rose against the euro, curbing the appeal of commodities as an investment.
Oil entered a bull market Aug. 18, less than three weeks after tumbling into a bear market, as prices surged partly on speculation that discussions among members of the Organization of Petroleum Exporting Countries may lead to action to stabilize the market. An output freeze was proposed in February, but talks in April ended with no final accord. For a second week, money managers slashed bets on falling West Texas Intermediate crude prices by a record.
"The short-covering rally has come to an end," said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. "There are two reasons for this: the likelihood of an agreement to freeze output is becoming less-and-less likely all the time and the dollar’s relative strength."
WTI for October delivery dropped 66 cents to settle at $46.98 a barrel on the New York Mercantile Exchange. The contract gained 0.7 percent to $47.64 on Friday, trimming a weekly decline. Total volume traded was 50 percent below the 100-day average at 2:40 p.m.
Brent for October settlement fell 66 cents, or 1.3 percent, to $49.26 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude closed at a $2.28 premium to WTI.
The U.S. currency rose after Federal Reserve officials spurred bets that the U.S. central bank will increase interest rates as soon as next month. The dollar advanced against the euro for the sixth time in seven days.
"Dollar strength will lead the commodity complex," said Michael Corcelli, chief investment officer at Alexander Alternative Capital LLC, a Miami-based hedge fund. "Attention will be focused on the central banks and interest rates in the weeks ahead."
While Iran supports action to stabilize the market, it won’t participate in a freeze in output before regaining its pre-sanctions share of OPEC production, state-run news service Shana reported Friday, citing Oil Minister Bijan Namdar Zanganeh.
“I’m not overly optimistic about an oil freeze being agreed,” Allman-Ward of Dana Gas said Sunday in a television interview on "Bloomberg Markets Middle East" in Dubai. “There’s pressure with Iran working to increase production. The environment is not that conducive to a freeze.”
Any decision to stabilize the market will require the full participation of all OPEC members and major suppliers from outside the group, Al Mazrouei said. The U.A.E. is the fourth-biggest OPEC producer, pumping 2.93 million barrels a day in July. Saudi Arabian output was 10.43 million a day the same month.
- China Petroleum & Chemical Corp., known as Sinopec, posted a 19.9 billion yuan ($3 billion) in profit for the first half of the year as its fuel-making business helped it weather the worst oil crash in a generation.
- Sinopec also is considering buying overseas assets, while shutting down old wells.
- The U.S. oil drilling rig count remained unchanged at 406 through Aug. 26 after eight weeks of gains, according to data from Baker Hughes Inc. on Friday.