Oil Rebounds on Talk of Russia-Iran-OPEC Cooperation Energy
Oil Rebounds on Talk of Russia-Iran-OPEC Cooperation
Russia supports year-long deal to stabilize oil, its OPEC representative tells Interfax
Oil prices rebounded from a new one-month low Tuesday after further talk of cooperation to cap output among the world’s largest oil exporters.
Russia supports a deal that would stabilize oil markets for a year, Russia’s permanent representative to the Organization of the Petroleum Exporting Countries told Interfax news agency Tuesday. “A year-long agreement would satisfy this criteria,” said Vladimir Voronkov.
OPEC Secretary-General Mohammed Barkindo also said that Iranian officials have told him they are committed to negotiating, according to a Bloomberg report. The parties are planning for informal talks at a meeting in Algeria next week, though officials have said those talks are at best likely just to set the stage for negotiations at other meetings to come later.
“It’s a real positive if anyone believes them,” said Ric Navy, senior vice president for energy futures at brokerage R.J. O’Brien & Associates LLC.
Light, sweet crude for October delivery settled up 14 cents, or 0.3%, to $43.44 a barrel on the New York Mercantile Exchange, its third winning session in the last four. Brent, the global benchmark, lost 7 cents, or 0.2%, to $45.88 a barrel, its fourth losing session out of six.
The October contract expires at settlement, and the more actively traded November contract recently gained 19 cents, or 0.4%, to $44.05 a barrel.
Libya, Iran and Nigeria combined want to increase their output by about 1.5 million barrels a day this year. OPEC production grew in July and August by 500,000 barrels a day from record Saudi production and more coming from Iraq, Iran and Kuwait, canceling out any positives from a second quarter in which demand for OPEC crude nearly equaled OPEC output of 33 million barrels a day, according to Citigroup Inc.
“The market rebalancing that bulls have been looking for is therefore looking less imminent,” the banks’ analysts said in a note.
Even Venezuela is raising exports, despite financial and production troubles, and the moves from all these countries are a clear message that none would be interested in agreeing to a cap, said Bjarne Schieldrop from Sweden’s SEB bank. He added that any deal would probably allow exceptions for Nigeria, Libya, Venezuela and Iran to lift production, possibly nullifying any agreement.
“It doesn’t seem like any oil producers outside of North America are doing anything to control their production levels,” said Gene McGillian, research manager at Tradition Energy.
The leak in Colonial Pipeline Co.’s Line 1 in the U.S. has also been fixed and the infrastructure should start to ramp up to full capacity in the coming days. The pipeline transports 1.3 million barrels of gasoline a day from the Gulf Coast refineries to the East Coast of the country.
Gasoline futures have been falling hard to start the week, as many traders and analysts had expected they would once the pipeline problems were fixed. Gasoline futures settled down 5.62 cents, or 4%, at $1.3646 a gallon, its largest daily decline since Sept. 1. It has lost 6.6% in two sessions.
That pipeline outage likely led to a 300,000-barrel decline in gasoline stockpiles in the week ended Friday, according to The Wall Street Journal’s survey of 13 analysts and traders. However, the bottleneck of gasoline may have led to lower crude consumption from refineries, with the survey showing expectations for a 3.3-million-barrel addition to crude stockpiles.