Brent oil held its gains as investors weighed the pledge by Russia and Saudi Arabia to cooperate to stabilize global crude markets that fell short of specific measures to bolster prices.
Futures rose 0.3 percent in London after climbing 4.8 percent over the previous two sessions. The contract jumped as much as 5.5 percent on Monday as news broke Saudi Arabia and Russia would make a “significant” joint-statement on the oil market at the G20 summit in China. Prices pared those gains as the two nations stopped short of announcing concrete steps to limit output.
“Everyone got very excited that Saudi Arabia and Russia were about to make a statement together and they were expecting them to say ‘we are both formally announcing we are committed to the freeze,’” said Angus Nicholson, a market analyst in Melbourne at IG Ltd. “I don’t think that is necessarily the end of it. The fact that they are talking so seriously is pretty positive for where the market is going.”
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Brent rose the most in three weeks on Friday after President Vladimir Putin said he’d like OPEC and Russia to agree to a freeze, speaking before he traveled to China to meet Saudi Deputy Crown Prince Mohammed bin Salman on Sunday. That followed oil’s rally last month amid speculation members of the Organization of Petroleum Exporting Countries and other producers would agree to cap production when they meet in Algiers. A similar proposal wasderailed in April over Saudi Arabia’s insistence that Iran participate.
Brent for November settlement was at $47.78 a barrel, up 15 cents, on the London-based ICE Futures Europe exchange at 2:11 p.m. in Hong Kong. Prices earlier swung between a 0.4 percent decline and 0.8 percent gain. The contract closed at $47.63 on Monday, 1.7 percent higher.
West Texas Intermediate for October delivery was at $45.32 a barrel on the New York Mercantile Exchange, up 88 cents from Friday’s close. Because of the U.S. Labor Day holiday, electronic transactions from Monday will be booked with Tuesday’s for settlement purposes. WTI for November was trading at a $1.84 discount to Brent for the same month.
Saudi Arabia’s Energy Minister Khalid Al-Falih said on Monday there’s no need to freeze production now and he’s optimistic a meeting later this month between producers in Algiers would lead to an agreement. His Russian counterpart, Alexander Novak, said the two nations were seeking ways to ease oil market volatility.
- Venezuela supports Russia-Saudi efforts to stabilize oil prices, according to the country’s oil minister, Eulogio Del Pino.
- Ecuador’s July oil output fell 0.8 percent to 545,500 barrels a day, according to a summary of a petroleum production report from the Ecuador Central Bank in Quito.
- Iran remains the key hurdle to any OPEC action on output, according to a report from Citigroup Inc.