Oil falls in volatile trade ahead of key meet­ing

The Pak Banker - - MARKETS/SPORTS -

Oil prices ended the week lower in choppy trad­ing, snap­ping two weeks of gains, as a frenzy of spec­u­la­tion about a pos­si­ble deal be­tween top oil pro­duc­ers clashed with con­cerns about a grow­ing sup­ply glut.

Af­ter a volatile week's trad­ing, much is rid­ing on Sun­day's meet­ing be­tween Venezue­lan Oil Min­is­ter Eu­lo­gio Del Pino and his Saudi coun­ter­part Ali al-Naimi in Riyadh, af­ter Del Pino's dis­cus­sions with the Qatari and Omani min­is­ters this week. As cash-strapped Venezuela tries to rally sup­port for con­certed ac­tion be­tween mem­bers of the Or­ga­ni­za­tion of the Pe­tro­leum Ex­port­ing Coun­tries to boost prices, Sun­day's meet­ing is seen "make or break" for a pos­si­ble deal, said Tim Evans, en­ergy fu­tures spe­cial­ist at Citi Fu­tures.

Adding to this week's roller­coaster ride in prices was the sud­den liq­ui­da­tion of a $600 mil­lion lever­aged fund bet on fall­ing prices. In­vestors were also weigh­ing a string of con­flict­ing in­di­ca­tors on Fri­day as the dol­lar .DXY re­cov­ered some of the ground lost over the past two days while in­vestors con­tin­ued to fret about grow­ing over­sup­ply, with U.S. in­ven­to­ries hit­ting record highs last week amid con­cerns about a slow­ing global econ­omy.

The pickup in the mar­ket ear­lier this week was not re­ally war­ranted, Gene McGil­lian, se­nior an­a­lyst at Tra­di­tion En­ergy said, re­fer­ring to the mar­ket seem­ingly brush­ing aside ex­tremely bear­ish in­ven­tory data ear­lier this week. "To­day when the dol­lar tried to push up, which I at­tribute mostly to a lit­tle week­end cov­er­ing, you started to see some sellers come back in the oil mar­kets," he said.

Global bench­mark Brent crude fu­tures LCOc1 set­tled down 40 cents, or 1.2 per­cent at $34.06 a bar­rel, af­ter trad- ing be­tween $35.14 and $33.81.

US crude fu­tures CLc1 closed 83 cents, or 2.6 per­cent lower, at $30.89 a bar­rel, af­ter touch­ing a high of $32.45. The con­tract fell slightly lower to $30.63 in post-set­tle­ment trad­ing. Prices briefly turned pos­i­tive af­ter data showed U.S. en­ergy firms this week deep­ened their oil rig cuts in the sev­enth week of de­clines, to the low­est lev­els in nearly six years. Both con­tracts were stuck in a nar­row $1.50 range through the ses­sion but ended lower as hopes of an OPEC-led pro­duc­tion cut that boosted prices in Jan­uary have faded and con­cerns about a global sup­ply glut have re­turned. In a sign that low prices are hav­ing a lim­ited im­pact on pro­duc­tion, only around 100,000 bar­rels per day of oil pro­duc­tion has been shut in glob­ally to date - about 0.1 per­cent of global out­put, in­dus­try re­search group Wood Macken­zie said on Fri­day.

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