Oil Climbs as Iraq Pledges to Cooperate With OPEC on Output Dealby
Iraqi minister says he’s ‘optimistic’ an accord can be reached
OPEC committee didn’t reach agreement Monday on output cuts
Oil rose as Iraq’s oil minister said it pledged to cooperate with OPEC to reach an agreement this week that’s acceptable to all members.
Futures gained 2.2 percent in New York, reversing an earlier decline. Iraq’s Oil Minister Jabbar al-Luaibi said Monday he’s “optimistic” a deal will be reached at OPEC’s summit in Vienna on Wednesday. However, after hours of discussions on Monday, an OPEC committee didn’t reach agreement on production cuts during high-level talks in Vienna, according to a delegate. Iran and Iraq still have reservations on cuts, the delegate said.
Saudi Arabia previously said that the producer group doesn’t necessarily need to curb oil output, after pulling out of a scheduled meeting with non-members including Russia.
The Organization of Petroleum Exporting Countries is in the midst of negotiations before its Nov. 30 meeting to adopt a supply deal that was first floated in September. Oil prices whipsawed last week as various OPEC members and Russia tried to position themselves ahead of a final accord to reduce production.
Comments from Iraq earlier are “classic jawboning,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, said by telephone. “If a deal is going to get done, the Saudis will have to shoulder virtually all of the pain.”
West Texas Intermediate for January delivery rose $1.02 to settle at $47.08 a barrel on the New York Mercantile Exchange. Brent for January settlement advanced $1 to end the session at $48.24 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a $1.16 premium to WTI.
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“Oil prices have been buffeted by the various pronouncements from OPEC producers. Iraq has come out today with a little more of a positive rhetoric,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by telephone. “What we have now is the usual poker game ahead of the meeting, where you have the various producers positioning themselves, each with their own agenda. In the end, they will sit down behind closed doors -- they will have to show their cards.”
While Saudi Arabia has pushed to reverse OPEC’s pump-at-will policy, Energy Minister Khalid Al-Falih said Sunday the oil market would recover in 2017 even without cuts as consumption grows in countries such as the U.S., according to Saudi newspaper Asharq al-Awsat. Algerian Energy Minister Noureddine Boutarfa had presented a proposal Saturday to Iranian Oil Minister Bijan Namdar Zanganeh for an OPEC cut of 1.1 million barrels a day, according to an Iranian oil ministry official.
Russia has so far resisted requests to join a cut, offering instead to freeze production at current levels. Energy Minister Alexander Novak has insisted that OPEC reach an internal consensus on output curbs before Russia considers joining an accord. Russian President Vladimir Putin and Iranian counterpart Hassan Rouhani had a phone conversation on Monday and stressed that OPEC’s efforts to cut output is a “key factor” in stabilizing the global oil market, according to an e-mailed statement from Kremlin.
Iran’s Oil Minister Bijan Namdar Zanganeh told Iranian state TV in a phone interview that politics may make an OPEC decision harder, according to the website of state broadcaster IRINN.
If OPEC fails to reach an output deal this week, oil prices may fall to the $20s, Amrita Sen, Energy Aspects Ltd. chief oil analyst, said in a Bloomberg Television interview in Vienna on Monday.
- If there is no OPEC deal, expect short-term volatility in the oil markets, Rob Thummel, a managing director and portfolio manager at Tortoise Capital Advisors LLC, says on Bloomberg Television.
- Cushing, Oklahoma, crude stockpiles increased 100,000 barrels in the week ended Nov. 25, according to a forecast compiled by Bloomberg.
- Iran’s Persian Gulf Petrochemical Industries Co. is in talks with Asian companies to raise as much as 1 billion euros ($1.1 billion) for an expansion, including a methanol project intended to serve China and other Asian customers.