You are here: Home » Reuters » News

Oil slumps 4 percent as no output deal expected for OPEC

By Barani Krishnan

NEW YORK (Reuters) - prices tumbled 4 percent on Friday on signs and arch rival were making little progress in achieving preliminary agreement ahead of talks by major crude exporters next week aimed at freezing production.

Also weighing on sentiment was data showing the United States was on track to add the most number of rigs in a quarter since the crude price crash began two years ago. Lower equity prices on Wall Street and other world stock markets was another bearish factor. [RIG/U] [.N] [MKTS/GLOB]

Brent crude futures settled down $1.76, or 3.7 percent, at $45.89 a barrel. For the week, it rose 0.3 percent, accounting for gains in the past two sessions.

U.S. West Texas Intermediate (WTI) crude futures fell $1.84, or 4 percent, to settle at $44.48. On the week, WTI gained 3 percent.

Crude futures slumped after sources said did not expect a decision in Algeria where the Organization of the Petroleum Exporting Countries and other big producers were to convene for Sept 26-28 talks.

"The Algeria meeting is not a decision making meeting. It is for consultations," a source familiar with Saudi officials' thinking told Reuters.

Earlier in the day, the market rallied when reported that had offered to reduce production if caps its own output this year.

prices are typically volatile before OPEC talks and Friday's session was tempered with caution despite market sentiment on a high this week after the U.S. government reported on Wednesday a third straight weekly drop in crude stockpiles.[EIA/S]

"A 'No Deal' result in our definition will be one where OPEC not only failed to get an explicit deal out of the meetings, but also failed to develop a forward plan," Macquarie Capital said in a note, referring to the Algeria talks. "This would be another epic fail by OPEC."

The Alegria talks are OPEC's second attempt for an agreement on production curbs, after a failed effort in May. The market has been sceptical of OPEC's commitment, though, as key members of the group, led by and have been pumping at optimum levels to protect market share. [OPEC/M]

Non-OPEC member Russia, the world's largest exporter, also hit record highs in production this week.

The production spike, rhetoric from OPEC and recent declines in U.S. stocks have kept crude in a $40-$50 range after 12-year lows of around $26 set in the first quarter.

"Let us reiterate that we still don't expect that a fundamentals driven rally will be strong enough to drive prices above $50 per barrel until Q1 or Q2 of next year," Credit Suisse said in a note. "Equally, however, we don't see a good fundamentals-based case for prices to collapse and set new cycle-lows all over again."

(Additional reporting by Sabina Zawadzki and Libby George in LONDON and Henning Gloystein; in SINGAPORE; Editing by Bernadette Baum and Cynthia Osterman)

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

image
Business Standard
177 22
Business Standard

Oil slumps 4 percent as no output deal expected for OPEC

Reuters  |  NEW YORK 

By Barani Krishnan

NEW YORK (Reuters) - prices tumbled 4 percent on Friday on signs and arch rival were making little progress in achieving preliminary agreement ahead of talks by major crude exporters next week aimed at freezing production.

Also weighing on sentiment was data showing the United States was on track to add the most number of rigs in a quarter since the crude price crash began two years ago. Lower equity prices on Wall Street and other world stock markets was another bearish factor. [RIG/U] [.N] [MKTS/GLOB]

Brent crude futures settled down $1.76, or 3.7 percent, at $45.89 a barrel. For the week, it rose 0.3 percent, accounting for gains in the past two sessions.

U.S. West Texas Intermediate (WTI) crude futures fell $1.84, or 4 percent, to settle at $44.48. On the week, WTI gained 3 percent.

Crude futures slumped after sources said did not expect a decision in Algeria where the Organization of the Petroleum Exporting Countries and other big producers were to convene for Sept 26-28 talks.

"The Algeria meeting is not a decision making meeting. It is for consultations," a source familiar with Saudi officials' thinking told Reuters.

Earlier in the day, the market rallied when reported that had offered to reduce production if caps its own output this year.

prices are typically volatile before OPEC talks and Friday's session was tempered with caution despite market sentiment on a high this week after the U.S. government reported on Wednesday a third straight weekly drop in crude stockpiles.[EIA/S]

"A 'No Deal' result in our definition will be one where OPEC not only failed to get an explicit deal out of the meetings, but also failed to develop a forward plan," Macquarie Capital said in a note, referring to the Algeria talks. "This would be another epic fail by OPEC."

The Alegria talks are OPEC's second attempt for an agreement on production curbs, after a failed effort in May. The market has been sceptical of OPEC's commitment, though, as key members of the group, led by and have been pumping at optimum levels to protect market share. [OPEC/M]

Non-OPEC member Russia, the world's largest exporter, also hit record highs in production this week.

The production spike, rhetoric from OPEC and recent declines in U.S. stocks have kept crude in a $40-$50 range after 12-year lows of around $26 set in the first quarter.

"Let us reiterate that we still don't expect that a fundamentals driven rally will be strong enough to drive prices above $50 per barrel until Q1 or Q2 of next year," Credit Suisse said in a note. "Equally, however, we don't see a good fundamentals-based case for prices to collapse and set new cycle-lows all over again."

(Additional reporting by Sabina Zawadzki and Libby George in LONDON and Henning Gloystein; in SINGAPORE; Editing by Bernadette Baum and Cynthia Osterman)

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

RECOMMENDED FOR YOU

Oil slumps 4 percent as no output deal expected for OPEC

NEW YORK (Reuters) - Oil prices tumbled 4 percent on Friday on signs Saudi Arabia and arch rival Iran were making little progress in achieving preliminary agreement ahead of talks by major crude exporters next week aimed at freezing production.

By Barani Krishnan

NEW YORK (Reuters) - prices tumbled 4 percent on Friday on signs and arch rival were making little progress in achieving preliminary agreement ahead of talks by major crude exporters next week aimed at freezing production.

Also weighing on sentiment was data showing the United States was on track to add the most number of rigs in a quarter since the crude price crash began two years ago. Lower equity prices on Wall Street and other world stock markets was another bearish factor. [RIG/U] [.N] [MKTS/GLOB]

Brent crude futures settled down $1.76, or 3.7 percent, at $45.89 a barrel. For the week, it rose 0.3 percent, accounting for gains in the past two sessions.

U.S. West Texas Intermediate (WTI) crude futures fell $1.84, or 4 percent, to settle at $44.48. On the week, WTI gained 3 percent.

Crude futures slumped after sources said did not expect a decision in Algeria where the Organization of the Petroleum Exporting Countries and other big producers were to convene for Sept 26-28 talks.

"The Algeria meeting is not a decision making meeting. It is for consultations," a source familiar with Saudi officials' thinking told Reuters.

Earlier in the day, the market rallied when reported that had offered to reduce production if caps its own output this year.

prices are typically volatile before OPEC talks and Friday's session was tempered with caution despite market sentiment on a high this week after the U.S. government reported on Wednesday a third straight weekly drop in crude stockpiles.[EIA/S]

"A 'No Deal' result in our definition will be one where OPEC not only failed to get an explicit deal out of the meetings, but also failed to develop a forward plan," Macquarie Capital said in a note, referring to the Algeria talks. "This would be another epic fail by OPEC."

The Alegria talks are OPEC's second attempt for an agreement on production curbs, after a failed effort in May. The market has been sceptical of OPEC's commitment, though, as key members of the group, led by and have been pumping at optimum levels to protect market share. [OPEC/M]

Non-OPEC member Russia, the world's largest exporter, also hit record highs in production this week.

The production spike, rhetoric from OPEC and recent declines in U.S. stocks have kept crude in a $40-$50 range after 12-year lows of around $26 set in the first quarter.

"Let us reiterate that we still don't expect that a fundamentals driven rally will be strong enough to drive prices above $50 per barrel until Q1 or Q2 of next year," Credit Suisse said in a note. "Equally, however, we don't see a good fundamentals-based case for prices to collapse and set new cycle-lows all over again."

(Additional reporting by Sabina Zawadzki and Libby George in LONDON and Henning Gloystein; in SINGAPORE; Editing by Bernadette Baum and Cynthia Osterman)

(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