Oil Trades Near $46 as Nigeria Sees OPEC Cuts Unlikely
Oil traded near $46/bbl after the biggest three-day gain since April as Nigeria’s oil minister signaled the prospect of production cuts from OPEC was unlikely.
Futures added 0.6% in New York, reversing an earlier loss of 0.9% as the dollar weakened, making commodities more attractive. Prices climbed 9.7% the previous three sessions following comments by Saudi Arabia’s energy minister that it’s prepared to discuss stabilizing the market. Nigerian Minister of State for Petroleum Emmanuel Kachikwu said he has “sparse” optimism that OPEC will trim output.
Oil has advanced about 16% since closing below $40 and tumbling into a bear market earlier this month. Russia is open to talks to freeze output “if necessary,” according to a newspaper report. A possible deal on capping production between members of the Organization of Petroleum Exporting Countries and non-member countries was first flagged in February but discussions in April ended with no final accord.
“The market has certainly responded very positively to news that OPEC is gathering,” Edward Bell, a commodities analyst at Emirates NBD in Dubai, said in a Bloomberg Television interview. “But in terms of seeing any concrete changes in policy with respect to production levels, I remain quite doubtful that anything gets agreed.”
West Texas Intermediate for September delivery rose 28 cents to $46.02/bbl on the New York Mercantile Exchange as of 10:52 a.m. London time. The contract climbed $1.25 to $45.74 on Monday, capping the biggest three-day gain since April 12. Total volume traded Tuesday was about 13% above the 100-day average.
Brent for October settlement increased 27 cents to $48.62/bbl on the London-based ICE Futures Europe exchange, trading at a $1.91 premium to WTI for the same month. The global benchmark crude climbed 2.9% to close at $48.35 on Monday, the highest settlement since July 12.
Russia sees no signals that Iran will change its position on a production cap and agree to an output freeze, news service Interfax reported, citing an unidentified diplomatic source close to the talks. Russian Energy Minister Alexander Novak told Arabic-language newspaper Asharq Al-Awsat that the nation was open to cooperating to stabilize markets after Saudi Energy Minister Khalid Al-Falih said 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.
