You are here: Home » Reuters » News
Business Standard

Oil prices fall over doubts of planned crude output cut

Reuters  |  SINGAPORE 

By Henning Gloystein

(Reuters) - prices fell on Monday, adding to Friday's steep losses as doubts re-emerged over the ability of major producers to agree output cuts at a planned meeting on Wednesday aimed at reining in oversupply.

Brent crude futures fell 2 percent at one point, but regained ground to trade down 35 cents, or 0.74 percent, at $46.89 per barrel at 0749 GMT.

U.S. West Texas Intermediate (WTI) crude futures also retraced early loses and was trading down 38 cents, or 0.78 percent, at $45.70 a barrel.

Monday's fall came amid choppy trading and after prices tumbled more than 3 percent on Friday on disagreement between OPEC and non-OPEC crude exporters like Russia over who should cut production by how much in order to curb a supply overhang that has more than halved prices since 2014.

Despite the wrangling, traders said they still expected some form of an output restriction to be agreed this week.

"An agreement is needed to avoid (price) downside. So, the question is what kind of agreement will they do? The market is clearly very nervous... We shall see. I think they will reach some form of agreement," said Oystein Berentsen, managing director for crude at trading firm Strong Petroleum in Singapore.

The Organization of the Petroleum Exporting Countries (OPEC) will meet in Vienna on Wednesday to decide on the details of a cut, potentially including non-OPEC members like Russia. A meeting between OPEC and non-OPEC producers that was to be held on Monday was called off after Saudi Arabia declined to attend.

Saudi Arabia's energy minister Khalid al-Falih said on Sunday that Saudi representatives would not attend the talks originally scheduled for Monday because no agreement within OPEC had been reached so far.

Falih said that the market would balance itself in 2017 even if producers did not intervene, and that keeping output at current levels could therefore be justified.

Despite the disagreements among producers, Morgan Stanley said it still expected "at least a paper deal agreement".

Even if a cut is agreed, oversupply may not end soon.

In the United States, the rig count exploring for new production rose by three last week, and Goldman Sachs said that "since its trough on May 27, 2016, producers have added 158 rigs (+50 percent) in the U.S."

Eiichiro Kitahara, Executive Officer of Japanese refiner TonenGeneral Sekiyu K.K said that "once prices reach above $60/barrel, (U.S.) shale producers are likely to resume operations, which will weigh on the market."

(Reporting by Henning Gloystein in SINGAPORE; Additional reporting by Yuka Obayashi in TOKYO; Editing by Kenneth Maxwell and Richard Pullin)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

RECOMMENDED FOR YOU

Oil prices fall over doubts of planned crude output cut

SINGAPORE (Reuters) - Oil prices fell on Monday, adding to Friday's steep losses as doubts re-emerged over the ability of major producers to agree output cuts at a planned meeting on Wednesday aimed at reining in global oversupply.

By Henning Gloystein

(Reuters) - prices fell on Monday, adding to Friday's steep losses as doubts re-emerged over the ability of major producers to agree output cuts at a planned meeting on Wednesday aimed at reining in oversupply.

Brent crude futures fell 2 percent at one point, but regained ground to trade down 35 cents, or 0.74 percent, at $46.89 per barrel at 0749 GMT.

U.S. West Texas Intermediate (WTI) crude futures also retraced early loses and was trading down 38 cents, or 0.78 percent, at $45.70 a barrel.

Monday's fall came amid choppy trading and after prices tumbled more than 3 percent on Friday on disagreement between OPEC and non-OPEC crude exporters like Russia over who should cut production by how much in order to curb a supply overhang that has more than halved prices since 2014.

Despite the wrangling, traders said they still expected some form of an output restriction to be agreed this week.

"An agreement is needed to avoid (price) downside. So, the question is what kind of agreement will they do? The market is clearly very nervous... We shall see. I think they will reach some form of agreement," said Oystein Berentsen, managing director for crude at trading firm Strong Petroleum in Singapore.

The Organization of the Petroleum Exporting Countries (OPEC) will meet in Vienna on Wednesday to decide on the details of a cut, potentially including non-OPEC members like Russia. A meeting between OPEC and non-OPEC producers that was to be held on Monday was called off after Saudi Arabia declined to attend.

Saudi Arabia's energy minister Khalid al-Falih said on Sunday that Saudi representatives would not attend the talks originally scheduled for Monday because no agreement within OPEC had been reached so far.

Falih said that the market would balance itself in 2017 even if producers did not intervene, and that keeping output at current levels could therefore be justified.

Despite the disagreements among producers, Morgan Stanley said it still expected "at least a paper deal agreement".

Even if a cut is agreed, oversupply may not end soon.

In the United States, the rig count exploring for new production rose by three last week, and Goldman Sachs said that "since its trough on May 27, 2016, producers have added 158 rigs (+50 percent) in the U.S."

Eiichiro Kitahara, Executive Officer of Japanese refiner TonenGeneral Sekiyu K.K said that "once prices reach above $60/barrel, (U.S.) shale producers are likely to resume operations, which will weigh on the market."

(Reporting by Henning Gloystein in SINGAPORE; Additional reporting by Yuka Obayashi in TOKYO; Editing by Kenneth Maxwell and Richard Pullin)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Oil prices fall over doubts of planned crude output cut

By Henning Gloystein

(Reuters) - prices fell on Monday, adding to Friday's steep losses as doubts re-emerged over the ability of major producers to agree output cuts at a planned meeting on Wednesday aimed at reining in oversupply.

Brent crude futures fell 2 percent at one point, but regained ground to trade down 35 cents, or 0.74 percent, at $46.89 per barrel at 0749 GMT.

U.S. West Texas Intermediate (WTI) crude futures also retraced early loses and was trading down 38 cents, or 0.78 percent, at $45.70 a barrel.

Monday's fall came amid choppy trading and after prices tumbled more than 3 percent on Friday on disagreement between OPEC and non-OPEC crude exporters like Russia over who should cut production by how much in order to curb a supply overhang that has more than halved prices since 2014.

Despite the wrangling, traders said they still expected some form of an output restriction to be agreed this week.

"An agreement is needed to avoid (price) downside. So, the question is what kind of agreement will they do? The market is clearly very nervous... We shall see. I think they will reach some form of agreement," said Oystein Berentsen, managing director for crude at trading firm Strong Petroleum in Singapore.

The Organization of the Petroleum Exporting Countries (OPEC) will meet in Vienna on Wednesday to decide on the details of a cut, potentially including non-OPEC members like Russia. A meeting between OPEC and non-OPEC producers that was to be held on Monday was called off after Saudi Arabia declined to attend.

Saudi Arabia's energy minister Khalid al-Falih said on Sunday that Saudi representatives would not attend the talks originally scheduled for Monday because no agreement within OPEC had been reached so far.

Falih said that the market would balance itself in 2017 even if producers did not intervene, and that keeping output at current levels could therefore be justified.

Despite the disagreements among producers, Morgan Stanley said it still expected "at least a paper deal agreement".

Even if a cut is agreed, oversupply may not end soon.

In the United States, the rig count exploring for new production rose by three last week, and Goldman Sachs said that "since its trough on May 27, 2016, producers have added 158 rigs (+50 percent) in the U.S."

Eiichiro Kitahara, Executive Officer of Japanese refiner TonenGeneral Sekiyu K.K said that "once prices reach above $60/barrel, (U.S.) shale producers are likely to resume operations, which will weigh on the market."

(Reporting by Henning Gloystein in SINGAPORE; Additional reporting by Yuka Obayashi in TOKYO; Editing by Kenneth Maxwell and Richard Pullin)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard