Oil prices fell about 3% yesterday, paring weekly gains, on a report that Saudi Arabia did not expect an agreement at talks next week among major crude exporters aimed at freezing production.
Crude futures slumped after Bloomberg reported that Saudi Arabia did not expect a decision at next week’s OPEC meeting in Algiers, where the biggest oil producers are expected to convene.
Bloomberg cited a “delegate” as its source.
Brent crude oil was down $1.33 (€1.18) or 2.8%, at $46.32 a barrel. For the week, it was up 1.6%.
US West Texas Intermediate (WTI) crude was down $1.40, or 2.9%, at $44.92. On the week, WTI showed a gain of less than 5%.
Earlier in the session, Brent and WTI were headed for their largest weekly gain in more than a month, reacting to a Reuters report that Saudi Arabia has offered to reduce production if rival Iran caps its own output this year.
The Reuters report was based on sources who were familiar with discussions between the two sides.
Traders and investors were also awaiting a US oil rig count report to ascertain if more drillers were returning to the well-pad in the world’s largest oil consumer.
The weekly report by oil services firm Baker Hughes had shown rig additions in 12 out of the last 13 weeks.
The global oil oversupply will persist into 2017 as OPEC members such as Saudi Arabia pump near record levels, others such as Iran and Iraq bolster capacity, and production outside the group weathers the price slump, according to the International Energy Agency.
Prices may struggle to hold above $40 a barrel unless OPEC acts, Citigroup added.
Crude is stuck at less than half the level it averaged at the start of the decade, straining the finances of producers around the world.
Reuters and Bloomberg
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