London: Oil traded near $46 a barrel after the biggest three-day gain since April as Nigeria’s oil minister signaled the prospect of production cuts from Organisation of Petroleum Exporting Countries (Opec) was unlikely.
Futures were little changed in New York, paring an earlier loss of 0.9 per cent as the dollar weakened, making commodities more attractive to investors. Prices gained 9.7 per cent the previous three sessions following comments by Saudi Arabia’s energy minister that it’s prepared to discuss stabilising the market.
Nigerian Minister of State for Petroleum Emmanuel Kachikwu has ‘sparse’ optimism that Opec will trim output, he said in a Twitter post. United States crude stockpiles probably rose last week, a survey shows.
Oil has gained about 16 per cent since closing below $40 a barrel and tumbling into a bear market earlier this month. Russia is open to talks to jointly freeze output "if necessary,” according to a newspaper report. A possible deal on capping production between members of the Opec and non-member producing countries was first flagged in February but deal discussions in April ended with no final accord.
"The Opec comments have caught the market’s attention, but history would suggest that nothing will happen,” said David Lennox, a resources analyst at Fat Prophets in Sydney. "While falling US supply has helped to narrow the surplus, Opec hasn’t helped. The group has continued to pump. It’s really only disruptions that have reduced supply.”
West Texas Intermediate for September delivery was 8 cents higher at $45.82 a barrel on the New York Mercantile Exchange in London. The contract climbed $1.25 to $45.74 on Monday, capping the biggest three-day gain since April 12. Total volume traded was about 16 per cent below the 100-day average.
Brent for October settlement was 11 cents higher at $48.46 a barrel on the London-based ICE Futures Europe exchange. Prices added 2.9 per cent to close at $48.35 on Monday, the highest settlement since July 12. The global benchmark crude traded at a $1.95 premium to WTI for October delivery.
Russia sees no signals that Iran will change its position on a production cap and agree to an output freeze, Interfax reported, citing a diplomatic source close to the talks whom the news service didn’t identify. Russian Energy Minister Alexander Novak told Arabic-language newspaper ‘Asharq Al-Awsat’ that the nation was open to cooperating to stabilize markets after Saudi Arabian Energy Minister Khalid Al Falih said that talks in Algiers may result in action.
Opec members will discuss the market when they gather for the International Energy Forum in Algeria next month, according to Mohammed bin Saleh Al Sada, Qatar’s energy and industry minister and the group’s current president.
Opec may agree on freezing production sometime this year, possibly in September or November, as Iran is now pumping close to capacity, Nomura Holdings analysts including Gordon Kwan said in a note. Iran’s oil minister Bijan Namdar Zanganeh will meet with Opec, non-Opec ministers at the International Energy Forum, Seda’s Reza Zandi said on Twitter, without saying how he got the information. US crude stockpiles probably rose by 900,000 barrels through August 12, according to the median estimate in a survey before an Energy Information Administration report on Wednesday.