- Saudi energy minister says no need to cap production right now
- Brent drop eases, WTI rises as dollars falls most since July
Brent oil fell after a pledge by Russia and Saudi Arabia to cooperate to stabilize the market failed to include any specific measures to support prices.
Futures dropped 0.8 percent in London. Brent jumped on Monday as news broke that Saudi Arabia and Russia would make a “significant” statement about the oil market. Prices slipped after a meeting between Saudi Energy Minister Khalid Al-Falih and his Russian counterpart ended without concrete steps and Al-Falih said there’s no need to freeze output now. West Texas Intermediate crude in New York rose as the dollar fell the most in five weeks against its peers.
"The failure of Russia and Saudi Arabia to take any steps to support the market is sending us lower," said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. "The Saudi oil minister actually talked the market lower, which is going to cost his country billions."
Brent rose the most in three weeks on Friday after President Vladimir Putin said he’d like OPEC and Russia to agree to an output freeze, speaking before he traveled to China to meet Saudi Deputy Crown Prince Mohammed bin Salman. Oil had rallied in August on speculation that members of the Organization of Petroleum Exporting Countries and other producers would agree to cap output when they meet informally in Algiers later this month. A similar proposal was derailed in April over Saudi Arabia’s insistence that Iran participate.
Brent for November settlement fell 37 cents to $47.26 a barrel on the London-based ICE Futures Europe exchange in New York. The contract climbed 1.7 percent on Monday. Total volume traded was 34 percent below the 100-day average at 3:05 p.m.
West Texas Intermediate for October delivery rose 39 cents, or 0.9 percent, to close at $44.83 a barrel on the New York Mercantile Exchange. Because of the U.S. Labor Day holiday, electronic transactions from Monday were booked with Tuesday’s for settlement purposes. WTI for November delivery closed at a $1.80 discount to Brent for the same month.
"It makes sense that Brent is leading the way because it’s the international benchmark," Yawger said.
A gauge of the dollar tumbled after a report showed America’s service industries expanded in August at the weakest pace in six years. The Bloomberg Dollar Spot Index, which measures the currency against a basket of 10 peers, fell 1.1 percent. A weaker greenback boosts the appeal of commodities to investors.
Al-Falih said he’s optimistic the Algiers meeting this month will lead to an agreement among producers. His Russian counterpart, Alexander Novak, said the two nations were seeking ways to ease oil-market volatility. Both were attending the G-20 summit in Hangzhou, China.
“For a couple of hours, the market was getting its hopes up that they would announce a strategy that would impact the physical market, but they were not close to meeting those expectations,” said Jens Naervig Pedersen, an analyst at Danske Bank A/S. “They under-delivered in the sense that it was quite vague in terms of targets for output.”
Iran’s President said he supports efforts by OPEC to stabilize oil prices, while reiterating that the country must restore output lost during years of sanctions.
“Iran had suffered greatly under sanctions,” Hassan Rouhani said, according to a statement on OPEC’s website citing the Iranian president. Therefore it is “vital for the country to make up its lost oil production,” he said at a meeting in Tehran Tuesday with OPEC Secretary-General Mohammed Barkindo.
OPEC has a responsibility to restore market stability and Iran will support efforts to bring about fair prices, Rouhani said at the meeting, which was also attended by Oil Minister Bijan Namdar Zanganeh.
"There will come a time where they must walk the walk,” said Carsten Fritsch, a commodities analyst at Commerzbank AG in Frankfurt. “Without any intervention then at some point the market will not listen any more to the comments.”
- Venezuela supports Russia-Saudi efforts to stabilize prices, according to the country’s oil minister, Eulogio Del Pino. Several other OPEC countries also welcomed the joint pledge to cooperate, including the United Arab Emirates, Kuwait and Qatar.
- OPEC’s Barkindo said he’s optimistic about the OPEC talks due to take place in Algiers at the end of the month
- Iran remains the key hurdle to any OPEC action on output, according to a report from Citigroup Inc.