On Monday oil cooled from four-month highs as concerns that oil producers can reach an output curb agreement ignited some speculators to undo bullish wages. Global benchmark Brent crude futures LCOc1 decreased $0.09 at $51.84 a barrel at 1029 GMT, near 2 percent lower than the four-month high reported on Friday. U.S. futures CLc1 pulled back from last week’s highs, and were last down 19 cents at $49.62 a barrel.
“Prices are down on profit-taking by speculators who ramped up net long positions big time in early October. They have increasing doubts over the promised OPEC production cuts,” stated Carsten Fritsch, commodities analyst at Commerzbank.
The Organization of the Petroleum Exporting Countries (OPEC) looks to agree an output curb by the time it meets next month. The goal is to limit production to a range of 32.50 million barrels per day (bpd) to 33.0 million bpd. OPEC’s current output PRODN-TOTAL is a record high 33.6 million bpd. Saudi Arabia’s Energy Minister Khalid al-Falih commented on Monday that OPEC should not reduce oil supply too much, already speculating at moderate market intervention.
“It is a very gentle hand on the wheel, we are not doing anything dramatic,” Falih stated, speaking at the World Energy Congress in Istanbul, where a number of oil producers will hold sideline discussionso.
Russian Energy Minister Alexander Novak further downplayed a potential production curb deal involving non-OPEC members by commenting Moscow preferred an output freeze over a reduction.
“We in general will look at this (proposal) but I think that for us a more favourable situation would be to maintain output levels,” he added.
Analysts at ABN Amro also took a watchful view on an OPEC deal, saying previous signals by the group at output cuts have always failed to have been followed up by action.
“Adding to these doubts is the realization that certain OPEC countries are demanding to be treated as exceptions,” analysts quoted, in reference to Libya and Nigeria, whose production has been affected by domestic unrest.
OPEC members Iran and Iraq are also not attending this week’s Istanbul meetings, sources said, despite previous anticipations that they would be present. Iraq, OPEC’s second largest producer, had already put a dent on expectations, saying over the weekend that it wants to increase output further in 2017.