Oil Holds Above $49 as Investors Look for More OPEC ComplianceBy and
Worldwide drilling in July highest in almost 2 years
Libya’s Sharara oil field ‘back to normal’ after disruption
Oil held above $49 a barrel as investors looked for signs that the world’s largest oil producing countries will solidify compliance with their supply-cut deal.
Futures dropped 0.4 percent in New York. Russia and Kuwait were said to meet producers such as Iraq in Abu Dhabi to discuss compliance to the OPEC production-cut deal. Libya’s production recovery was back on track as operations at its biggest oil field, Sharara, returned to normal after being halted Sunday by armed protesters. Rebounding Libyan supply has hindered efforts by fellow OPEC members to plug a global glut. Worldwide drilling reached its highest in almost two years in July, according to Baker Hughes Inc.
"The only thing we have is what comes out of the OPEC meeting," Bob Yawger, director of the futures division at Mizuho Securities USA in New York, said by telephone. "So there’s speculation on whether the Russians agree to a bigger supply cut. But someone is going to have to say something if you want to get out of this $48, $49 range."
Oil in New York was unable to hold its advance above $50 a barrel last week as signs of rising global supply eroded optimism that output curbs by the Organization of Petroleum Exporting Countries and its partners are rebalancing the market. Compliance with promised production cuts was 86 percent in July, according to a Bloomberg survey.
West Texas Intermediate for September delivery fell 19 cents to settle at $49.39 a barrel on the New York Mercantile Exchange. Total volume traded was about 14 percent above the 100-day moving average.
Brent for October settlement dropped 5 cents to close the session at $52.37 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.80 to October WTI.
Saudi Arabia said last month that it planned to increase pressure on nations failing to comply with their pledged cuts. Russia and Kuwait experts started two days of separate meetings with representatives of Iraq, U.A.E., Kazakhstan, Malaysia in Abu Dhabi to discuss countries’ compliance with global crude production cuts, according to people familiar with situation, who asked not to be identified.
"Before we see a significant takeoff, we are going to have to see commitment from OPEC that they are in it for as long as is required," Bart Melek, head of global commodity strategy at TD Securities in Toronto, said by telephone. "They are going to have to come out and make those statements."
OPEC’s plan to cut production has “misfired” and the group would have been better with a deeper cut for a shorter period of time, Francisco Blanch, Bank of America Merrill Lynch global head of commodities research, said in a Bloomberg Television interview.
Libya resuming operations at Sharara “is emblematic of the problems for OPEC and the oil market in terms of just the gross oversupply situation that we remain in,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. The meetings among producers “will be a negative for the market too if they can’t agree on recommending some further measures.”
- Cushing crude stocks rose 200k barrels last week, according to a Bloomberg forecast.
- U.S. crude stockpiles are seen falling 2.1 million barrels last week in a Bloomberg survey.
- Spain’s Repsol SA, Norway’s Statoil ASA and Italy’s Eni SpA are said to have evacuated some or all expatriate workers from Venezuela as the political crisis continues.
- Goldman Sachs Group Inc. said global oil-demand growth could be even higher than its projection of 1.63 million barrels a day this year, after surprising strength in China and elsewhere during the second quarter.
— With assistance by Ben Sharples, Grant Smith, and Meenal Vamburkar