Oil price falls in volatile trade ahead of key oil producer meeting
After a volatile week's trading, much is riding on Sunday's
meeting between Venezuelan Oil Minister Eulogio Del Pino
and his Saudi counterpart Ali al-Naimi in Riyadh, after Del
Pino's discussions with the Qatari and Omani ministers this
Oil prices ended the week lower in choppy
trading on Friday, snapping two weeks of gains, as a frenzy
of speculation about a possible deal between top oil producers
clashed with concerns about a growing supply glut.
After a volatile week's trading, much is riding on Sunday's
meeting between Venezuelan Oil Minister Eulogio Del Pino and
his Saudi counterpart Ali al-Naimi in Riyadh, after Del Pino's
discussions with the Qatari and Omani ministers this week.
As cash-strapped Venezuela tries to rally support for
concerted action between members of the Organization of
the Petroleum Exporting Countries to boost prices, Sunday's
meeting is seen "make or break" for a possible deal, said Tim
Evans, energy futures specialist at Citi Futures.
Adding to this week's rollercoaster ride in prices was the
sudden liquidation of a $600 million leveraged fund bet on
falling prices.
Investors were also weighing a string of conflicting indicators
on Friday as the dollar <.DXY> recovered some of the ground
lost over the past two days while investors continued to fret
about growing oversupply, with U.S. inventories hitting record
highs last week amid concerns about a slowing global economy.
The pickup in the market earlier this week was not really
warranted, Gene McGillian, senior analyst at Tradition
Energy said, referring to the market seemingly brushing aside
extremely bearish inventory data earlier this week. [EIA/S]
"Today when the dollar tried to push up, which I attribute
mostly to a little weekend covering, you started to see some
sellers come back in the oil markets," he said.
Global benchmark Brent crude futures <LCOc1> settled down
40 cents, or 1.2 percent at $34.06 a barrel, after trading
between $35.14 and $33.81.
U.S. crude futures <CLc1> closed 83 cents, or 2.6 percent
lower, at $30.89 a barrel, after touching a high of $32.45.
The contract fell slightly lower to $30.63 in post-settlement
trading.
Prices briefly turned positive after data showed U.S. energy
firms this week deepened their oil rig cuts in the seventh
week of declines, to the lowest levels in nearly six years.
Both contracts were stuck in a narrow $1.50 range through
the session but ended lower as hopes of an OPEC-led
production cut that boosted prices in January have faded and
concerns about a global supply glut have returned.
In a sign that low prices are having a limited impact on
production, only around 100,000 barrels per day of oil
production has been shut in globally to date - about 0.1
percent of global output, industry research group Wood
Mackenzie said on Friday.
Morgan Stanley warned on Friday that a rebalancing in the
oil market may not occur until mid-2017.
As markets try to balance themselves, it will likely lead to
further volatility as investors close excessive positions, ABN
Amro said in a note.
In a sign that optimism had not fully returned to the market,
money managers cut their bullish wagers on U.S. crude oil in
the week to Feb. 2, data from the U.S. Commodity Futures
Trading Commission (CFTC) showed on Friday
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