Futures fell as much as 2 percent in New York after dropping 4 percent on Friday. Saudi Arabia for the first time on Sunday suggested OPEC doesn’t necessarily need to curb output and pulled out of a scheduled meeting with non-member producers, including Russia. OPEC will hold an internal meeting in Vienna Monday to resolve its differencesand, as part of the final push to reach an agreement, oil ministers from Algeria and Venezuela are heading to Moscow to get the group’s biggest rival on board, Bloomberg reported.
The Organization of Petroleum Exporting Countries is heading into the final stretch before its Nov. 30 meeting to adopt a deal first floated in September to collectively reduce output. Saudi Arabia, the group’s de facto leader, is seeking to reverse the pump-at-will policy it supported in 2014 and is now pushing members to agree how they will individually shoulder the first production cuts in eight years. Saudi Oil Minister Khalid Al-Falih said the oil market will recover in 2017 even without cuts.
“The market is currently quite pressured by the uncertainties raised from various reports, including Saudi Arabia pulling out of Monday’s talks with non-OPEC nations,” Seo Sang-young, a Seoul-based market strategist at Kiwoom Securities Co., said by phone. “It’s also highly suspicious whether OPEC will keep its promises even if it achieves an accord because the members are constantly raising production.”
West Texas Intermediate for January delivery dropped as much as 92 cents to $45.14 a barrel on the New York Mercantile Exchange and was at $45.71 at 8:01 a.m. in London. Prices lost $1.90 to $46.06 a barrel on Friday. Total volume traded was more than double the 100-day average.
Output Accord
Brent for January settlement fell as much as 96 cents, or 2 percent, to $46.28 a barrel on the London-based ICE Futures Europe exchange. The contract dropped $1.76, or 3.6 percent, to $47.24 a barrel on Friday. The global benchmark traded at a $1.21 premium to WTI.
Global crude demand will recover next year and then prices will stabilize, even without production cuts from OPEC, Al-Falih said in Dhahran, eastern Saudi Arabia, on Sunday, according to the Saudi newspaper Asharq al-Awsat. The oil-producer group doesn’t have a single path to cut output and it can also depend on recovery in consumption, especially from the U.S., the oil minister said, according to the newspaper.
OPEC needs to reach an internal consensus on output curbs before Russia can join a pact, the country’s energy ministry said in a statement, citing Minister Alexander Novak. The country has so far resisted OPEC’s request that it join the cut, offering instead to freeze production at its current level.
Algeria’s Energy Minister Noureddine Boutarfa, architect of the group’s preliminary agreement reached in Algiers, will travel Monday to Moscow with his Venezuelan counterpart before meeting Iraq’s oil minister Tuesday in Vienna, according to two OPEC delegates with knowledge of the plan. He presented aproposal Saturday to Iranian Oil Minister Bijan Namdar Zanganeh for an output cut of 1.1 million barrels a day for OPEC and 600,000 barrels a day for non-member countries.
Oil-market news:
- Iran’s Persian Gulf Petrochemical Industries Co. is in talks with Asian companies to raise as much as 1 billion euros ($1.1 billion) for an expansion including a methanol project intended to serve China and other Asian customers.
- Shale drillers have added 158 rigs since May, according to Baker Hughes Inc. At the same time, companies such as Chesapeake Energy Corp. and EOG Resources Inc. have been increasing their efficiency by cramming more and more sand into individual wells, aiming to extend their reach miles further.