Oil hov­ers near one-month lows; OPEC deal un­likely

Kuwait Times - - BUSINESS -

Oil held just above one-month lows yes­ter­day, fol­low­ing its largest one­day slide in more than five weeks al­though an­a­lysts said the prospect of a more sub­stan­tial price re­cov­ery was lim­ited. The mar­ket re­mains weighed down by record out­put from the world’s largest ex­porters, and mount­ing un­cer­tainty that OPEC and its ri­vals can do much to tackle a two-year global sur­plus.

Oil prices hit their high­est in a year in Oc­to­ber af­ter the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries said at a meet­ing in Al­ge­ria in late Septem­ber it had agreed to limit pro­duc­tion that is around record highs to help erode the sur­plus. But a grow­ing num­ber of coun­tries that say they are either un­will­ing, or un­able to cut, has cast doubt on the group’s abil­ity to reach an ef­fec­tive deal when it meets on Nov 30.

Brent Jan­uary crude fu­tures were up 12 cents at $48.73 a bar­rel by 1145 GMT, hav­ing fallen by nearly 3 per­cent the day be­fore in their big­gest one-day drop since Sept 23. US West Texas In­ter­me­di­ate (WTI) fu­tures were down 17 cents on the day at $46.69 a bar­rel, but off a ses­sion low of $46.56, fol­low­ing Mon­day’s near-4 per­cent drop. “We had a very strong sell-off yes­ter­day and oil is bounc­ing a lit­tle bit this morn­ing,” said Olivier Jakob from Swiss-based con­sul­tancy Petro­ma­trix. “But Brent has fallen back to the low­est since the meet­ing in Al­giers and ba­si­cally, most, if not all of the OPEC pre­mium has been wiped out and spec­u­la­tors are still very long in crude oil ... at the end of the month, we do run the risk that (they) will be sell­ing.” OPEC has called upon ma­jor pro­duc­ers out­side of the group to agree to limit out­put, but with lim­ited suc­cess so far. Top oil pro­ducer Rus­sia has said it will con­sider freez­ing out­put. Kazakh En­ergy Min­is­ter Kanat Bozum­bayev said on Tues­day his coun­try would not cut out­put, par­tic­u­larly as the Kasha­gan field ramps up to a tar­get of 200,000 bpd by the end of this year. “The lack of an agree­ment so far has pushed oil prices sharply lower, with weak­en­ing oil fun­da­men­tals war­rant­ing oil prices in the low $40s a bar­rel in our view, if OPEC is un­able to de­liver a con­vinc­ing agree­ment,” Gold­man Sachs said in a re­search note. “Even if the fear of such low prices leads OPEC to de­liver an agree­ment on Novem­ber 30, we re­it­er­ate our view that the odds of it suc­ceed­ing are low.” — Reuters

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