Oil set for weekly gain as Saudis reiterate wish for stability

London: Oil is heading for its biggest weekly advance since April after Saudi Arabia signaled its prepared to discuss stabilising markets at informal Opec talks next month after prices tumbled into a bear market.
Futures were little changed in New York, on track for a weekly increase of 3.9 per cent after surging on Thursday. Discussions with members of the Organisation of Petroleum Exporting Countries (Opec) and non-Opec producers may result in action to stabilise the market, Saudi Arabia’s Energy Minister Khalid Al Falih said in a statement, according to media reports including Reuters. Global markets will continue to rebalance this year, said the International Energy Agency (IEA).
Oil has fluctuated after falling more than 20 per cent into a bear market and closing below $40 a barrel last week. Refiners around the world will process record volumes of crude this quarter, shrinking brimming crude supplies, the IEA said in its monthly report on Thursday. Saudi Arabia raised production to a record last month, according to data the country submitted to Opec.
“Talks about supply cuts from the oil cartel’s members have resurfaced,” said Norbert Ruecker, head of commodity research at Julius Baer Group in Zurich. “We see the chances of any action as exceptionally slim. The talks rather taste like a creative way to prop up prices.”
West Texas Intermediate (WTI) for September delivery was at $43.42 at 12:05pm London time, having earlier risen as much as 68 cents to $44.17 a barrel on the New York Mercantile Exchange. The contract gained $1.78 to $43.49 on Thursday, rebounding after a 3.1 per cent drop during the previous two sessions. Total volume traded was about 27 per cent above the 100-day average.
Stabilise markets
Brent for October settlement was 14 cents lower at $45.90 a barrel on the London-based ICE Futures Europe exchange after rising as much as 1.4 per cent earlier. The contract gained 4.5 per cent to $46.04 a barrel on Thursday. Prices are up 3.8 per cent this week. The global benchmark crude traded at a premium of $1.74 to WTI for October.
While the market is on the path to rebalancing, reducing the inventory overhang of crude and products will take time, Al Falih said in the statement. Opec will hold informal talks at the International Energy Forum in Algiers, Mohammed Al Sada, Qatar’s energy minister and holder of Opec’s rotating presidency, said in a statement on Monday.
“The Saudis have emphasised several times now that they would consider the possibility of getting together to talk about the dynamics of how the markets are working, but that Iran and Russia would have to be part of that conversation,” Adam Sieminski, administrator at the US Energy Information Administration, said in a Bloomberg television interview. “And neither of those countries really wants to participate.”