Oil Loses Nearly 4% As Hopes Over Saudi, Russia Deal Fade
NEW YORK, Feb 16 (Reuters) - Brent oil fell almost 4 percent on Tuesday, erasing early gains after top producers Russia and Saudi Arabia dashed expectations of an outright supply cut by agreeing only to freeze output if other big exporters joined them.
Benchmark Brent prices jumped briefly through $35 a barrel after Russia and Saudi Arabia agreed to keep output at January levels, in what could be the first joint OPEC and non-OPEC deal in 15 years.
Qatari energy minister Mohammad bin Saleh al-Sada said the step would help to stabilize the oil market, which has experienced price declines not seen since the early 2000s because of a supply glut.
Elsewhere, inventories at the Cushing, Oklahoma delivery point for U.S. crude futures rose by nearly 705,000 barrels during the week to Feb. 12, traders said, citing data issued by market intelligence firm Genscape.
Brent settled down $1.21 at $32.18 a barrel, after rising earlier to $35.55.
U.S. crude settled down 40 cents at $29.04, off the day's high of $31.53.
Oil prices have fallen by more than 70 percent in the past 20 months, driven down by near-record production both from the Organization of the Petroleum Exporting Countries and other producers, such as Russia.
Tuesday's early rally ran out of steam as investors weighed the chances of an output freeze while Iran remained absent from the talks and determined to raise production. Sources familiar with Iranian thinking on supply said Tehran would be willing to consider a freeze once its production had reached pre-sanctions levels.
"I'm adding to the short positions I have in U.S. crude spreads as I only expect price declines from here," said Tariq Zahir at New York's Tyche Capital Advisors. "The output freeze will do nothing to alleviate excess supply."
Goldman Sachs, Wall Street's most influential voice in oil trading, was equally bearish on the plan, saying "there remains high uncertainty that it even materializes, in our view."
But analysts also cautioned of violent price spikes and market volatility in coming weeks should there be indications of serious production or stockpile declines. On Friday, both Brent and U.S. prices jumped about 12 percent each, rocketing from 12-year lows, on the renewed speculation that OPEC might cut output.
(Additional reporting by Amanda Cooper in London; Editing by Marguerita Choy and Chris Reese)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- How Likely Is an All-Out War in the Middle East Involving the USA?
- Rooftop Solar Now 4th Largest Source of Electricity in Australia
- US Confirms Reimposition of Oil Sanctions against Venezuela
- EU, Industry Players Ink Charter to Meet Solar Energy Targets
- Analyst Says USA Influence on Middle East Seems to be Fading
- Russian Ships to Remain Banned from US Ports
- Brazil Court Reinstates Petrobras Chair to Divided Board
- EIB Lends $425.7 Million for Thuringia's Grid Upgrades
- Var Energi Confirms Oil Discovery in Ringhorne
- Seatrium, Shell Strengthen Floating Production Systems Collaboration
- An Already Bad Situation in the Red Sea Just Got Worse
- What's Next for Oil? Analysts Weigh In After Iran's Attack
- USA Regional Banks Dramatically Step Up Loans to Oil and Gas
- EIA Raises WTI Oil Price Forecasts
- How Likely Is an All-Out War in the Middle East Involving the USA?
- Venezuela Authorities Arrest Two Senior Energy Officials
- Namibia Expects FID on Potential Major Oil Discovery by Yearend
- Oil Markets Were Already Positioned for Iran Attack
- Is The Iran Nuclear Deal Revival Project Dead?
- Petrobras Chairman Suspended
- Oil and Gas Executives Predict WTI Oil Price
- An Already Bad Situation in the Red Sea Just Got Worse
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Oil and Gas Execs Reveal Where They See Henry Hub Price Heading
- Equinor Makes Discovery in North Sea
- Macquarie Strategists Warn of Large Oil Price Correction
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Standard Chartered Reiterates $94 Brent Call
- Chevron, Hess Confident Embattled Merger Will Close Mid-2024
- Analysts Flag 'Remarkable Feature' of 2024 Oil Price Rally