Oil stages weak rebound as hopes ease for output deal
Singapore : Oil prices posted marginal gains in Asia today as an industry report showing a decline in US stockpiles was offset by worries about the chances of this week’s key producers meeting ending with a deal to limit output.
The American Petroleum Institute (API) said yesterday that US supplies fell by 752,000 barrels last week, fuelling hopes official figures Wednesday will also show lower inventories in the world’s top economy and oil consumer.
However, there are fears a deal between Organization of Petroleum Exporting Countries (OPEC) and Russia this week will not be struck when they meet in Algeria to discuss a global supply glut and overproduction that has hammered prices for two years.
On the eve of the gathering Iranian Oil Minister Bijan Zanganeh told reporters: “It’s not in our agenda to reach an agreement in two days. We need time for more consultation.”
Tehran’s position means other participants — particularly regional rival and OPEC kingpin Saudi Arabia — are unlikely to join in any concerted plan to limit output.
At around 0335 GMT, US benchmark West Texas Intermediate for delivery in November was up one cent at $44.68 and Brent crude for November added 21 cents at $46.18 a barrel.
“It’s the API data that’s driving the bounceback in Asia,” Angus Nicholson, a Melbourne-based analyst with IG Markets, told AFP.
“In general, expectations are now pretty low for a deal to come out of the Algiers meeting.”
However, he added: “At the same time, the groundwork is also being laid for some sort of supply deal over the next month or two. Many analysts are expecting a deal to come at the November 30 OPEC meeting”.
OPEC kingpin Saudi Arabia has so far refused to curb its output at a time when Iran is ramping up production following the lifting of nuclear-related sanctions in January.
Iran wants to increase its daily output to pre-sanctions levels of four million barrels, from the current estimated level of up to 3.8 million, according to Zanganeh.
“The Saudis still have the olive branch out but the Iranians, relatively fresh back from sanctions, are still saying that they won’t be cutting production,” Greg McKenna, chief market analyst at forex firm AxiTrader.
But there were some tentative signs of a narrowing of differences in Algiers.
Zanganeh signalled that an agreement to stabilise oil prices could be struck at OPEC’s November 30 meeting in Vienna.