Oil Climbs to Two-Week High as Saudis, Iran Said to Meet Againby
Iraq sees now as ‘right time’ for OPEC production agreement
U.S. crude stockpiles fell 6.2 million barrels last week: EIA
Oil climbed to a two-week high after rival OPEC members Saudi Arabia and Iran met in Vienna for a second day before the wider group holds talks in Algiers.
Futures rose 2.2 percent in New York. Officials from Saudi Arabia and Iran, whose rivalry derailed an oil supply accord earlier this year, have yet to reach an agreement, a person who was briefed on the discussions said. Oil extended gains as equities advanced and the dollar fell. U.S. crude supplies dropped to the lowest since February, trimming stockpiles that remain at the highest seasonal level in at least three decades, government data showed Wednesday.
"The Saudi talks with Iran increase the likelihood of an agreement next week," said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. "The Iraqis are saying it’s the right time for OPEC to make a deal, which is also supportive."
Oil has fluctuated since August’s rally on speculation the Organization of Petroleum Exporting Countries and Russia will agree on ways to stabilize the market when they meet Sept. 28. While Venezuelan President Nicolas Maduro said members are close to a deal, all but two of 23 analysts surveyed by Bloomberg said an agreement to limit production is unlikely. Freezing output was proposed in February, but a meeting in April ended with no final accord.
West Texas Intermediate for November delivery advanced 98 cents to settle at $46.32 a barrel on the New York Mercantile Exchange. It was the highest close since Sept. 8. Total volume traded was about 10 percent above the 100-day average.
Brent for November settlement rose 82 cents, or 1.8 percent, to $47.65 a barrel on the London-based ICE Futures Europe exchange. The global benchmark closed at a $1.33 premium to WTI.
Financial markets rallied around the world as the dollar weakened after the Federal Reserve left interest rates unchanged Wednesday and scaled back its projections for future hikes. The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fell as much as 0.5 percent. When the dollar falls investors flock to dollar-denominated raw materials.
"This is a risk on day," Yawger said. "Equities are up and the dollar is moving lower because of the Fed announcement, which is supporting commodities. The negative dollar correlation is definitely at work."
Saudi Arabian and Iranian officials met at the OPEC headquarters to make preparations for informal discussions between energy ministers in Algiers, according to two people familiar with the matter. The face-to-face talks between the fierce regional rivals show diplomatic efforts to secure a meaningful deal next week are still under way despite market skepticism.
Now is the “right time” for OPEC to reach an agreement on oil output, and crude prices may fall if members fail to take a decision when they meet, said Falah Al-Amri, Iraq’s governor to the group. Countries including Iran have boosted output and reached their targets, and current prices are not good for producers, he said.
U.S. crude inventories fell by 6.2 million barrels last week, an Energy Information Administration report showed on Wednesday. A Bloomberg survey before the report forecast a gain. Output increased for a second week to 8.5 million barrels a day. Gasoline inventories fell to 225 million barrels.
“U.S. crude oil inventories fell hard last week,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. “A good day for oil bulls, but their optimism might not last as the oversupplied nature of the global oil market shows no signs of easing.”
- The biggest gasoline pipeline in the U.S. has resumed normal operations after a spill knocked it offline for 12 days and cut supplies to 50 million Americans in the Southeast.
- Iran is exporting between 2.3 million and 2.4 million barrels a day, National Iranian Tanker Co. Commercial Director Nasrollah Sardashti said at an event in U.A.E. emirate of Fujairah.
- Total SA, the French oil company, increased its cost-savings goal and pared its target for investment for 2017 and beyond to help ride out a slump in crude prices.