Oil halts rally over out­put con­cerns

The Myanmar Times - - Business -

OIL prices eased in Asia trade yes­ter­day but held above US$45 a bar­rel as the mar­ket weighed the pos­si­bil­ity of ma­jor pro­duc­ers reach­ing an agree­ment to freeze out­put dur­ing a meet­ing next month.

Mem­bers of the Or­gan­i­sa­tion of Petroleum Ex­port­ing Coun­tries (OPEC) as well as non-mem­bers are sched­uled to meet in­for­mally in Al­ge­ria in Septem­ber, and Saudi Ara­bia’s oil min­is­ter Khalid al-Falih has hinted that dis­cus­sions could in­clude ac­tions to sta­bilise prices.

His re­marks last week sparked a price rally as they were widely seen as a sug­ges­tion that OPEC could re­vive talks on trim­ming high out­put lev­els.

Prices con­tin­ued their rise overnight af­ter Rus­sian En­ergy Min­is­ter Alexan­der No­vak said his coun­try was work­ing with Saudi Ara­bia to achieve oil mar­ket sta­bil­ity – hint­ing at a pos­si­ble pro­duc­tion freeze in co­op­er­a­tion with OPEC.

In New York, US crude jumped $1.25 to close at $45.74, but halted its in­cline in Asian trade.

An­a­lysts said there were doubts an ac­cord would be reached.

“Some doubt about a pos­si­ble deal to freeze out­put could have set in,” IG Mar­kets Sin­ga­pore an­a­lyst Bernard Aw told AFP.

Mr Aw said a pre­vi­ous at­tempt to freeze out­put at Jan­uary 2016 lev­els failed in April af­ter Saudi Ara­bia said it wanted all pro­duc­ers, in­clud­ing Iran, to be part of the agree­ment.

Iran had re­fused, say­ing it needed to re­gain mar­ket share lost dur­ing years of Western eco­nomic sanc­tions over its nu­clear am­bi­tions.

“In­vestors are wondering: If Iran doesn’t par­tic­i­pate in any such dis­cus­sions, would Saudi Ara­bia still be amenable?” Mr Aw said.

“The chances of a deal ac­tu­ally oc­cur­ring at next month’s OPEC meet­ing are min­i­mal,” An­gus Ni­chol­son, a strate­gist at IG Mar­kets, said in an email com­men­tary.

“The Saudis are happy to com­mit to some sort of OPEC-wide sup­ply freeze deal so long as Iran is party to it. And Iran re­fuses to agree to any deal that will in­hibit them from lift­ing out­put to pre-sanc­tions lev­els.”

Saudi Ara­bia, the big­gest ex­porter in the OPEC pro­duc­ers’ group, in May also re­placed its vet­eran oil min­is­ter Ali al-Naimi with Khalid al-Falih, who is thought to be, if any­thing, less amenable to a pro­duc­tion cut.

“Since Al-Naimi’s re­moval, the tone to­ward work­ing with Saudi Ara­bia’s main re­gional ri­val, Iran, has dra­mat­i­cally hardened mak­ing a deal even less likely,” Mr Ni­chol­son added.

Oil prices had en­tered a “bear” mar­ket at the start of the month on over­sup­ply con­cerns, fall­ing more than 20 per­cent and clos­ing be­low $40 for the first time since April.

Any agree­ment to curb pro­duc­tion would help re­bal­ance the crude oil mar­ket, where out­put has been run­ning ahead of de­mand. –

Newspapers in English

Newspapers from Myanmar

© PressReader. All rights reserved.