Oil prices retreat in Asia trade
The Organization of the Petroleum Exporting Countries said Monday that a meeting would take place on the sidelines of the International Energy Forum in Algeria from September 26 to 28, ahead of a planned meeting due at the end of November.
The announcement was seen as a hint OPEC could take action to stabilise the crude market, amid rumours it may freeze output levels.
Prices have been fluctuating since entering a “bear” market last week, falling more than 20 percent and closing below $40 a barrel for the first time since April.
“News that OPEC would be having a September meeting with certain members keen to push for supply cuts again served as the impetus for oil prices to rally,” said Angus Nicholson, a strategist at IG Markets Ltd. in Melbourne.
“While a deal is highly unlikely to eventuate, the fact that it is even being mentioned shows how much difficulty the past month’s renewed selloff was causing many struggling OPEC members.”
But in Asian trade, prices fell back as investors weighed whether the meeting would bring about any tightening of supply, according to Bloomberg.
At around 0700 GMT, West Texas Intermediate was down 46 cents to $42.56 while Brent lost 53 cents to $44.86.
Vienna-based OPEC last month said it expected the global supply glut to ease further this year and next due to reductions in oil output from producers outside the cartel, particularly the United States.
If accurate, this would be a vindication of its strategy since 2014 of squeezing non-OPEC suppliers by keeping production at high levels despite low prices.
“Nobody seriously thinks that OPEC will come up with anything that will tighten supply,” Michael McCarthy, a chief strategist at CMC Markets in Sydney told Bloomberg News.
“Having bounced off the support near $40, and without any further supply coming online, we’re moving toward the middle of the trading range of about $44 to $45 for West Texas.”
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