Oil prices tumbled on Friday as traders bet that a key producers meeting in Doha today would yield no effective measures to curb the global oversupply.
US benchmark West Texas Intermediate (WTI) for delivery next month slid US$1.14 (2.7 percent) to US$40.36 a barrel on the New York Mercantile Exchange.
In London, Brent North Sea crude for June delivery, the international benchmark, closed at US$43.10 a barrel, a decline of US$0.74 (1.7 percent) from Thursday’s settlement.
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Today’s meeting in the Qatari capital is expected to gather about 15 countries, mostly from OPEC, led by Saudi Arabia, and some non-OPEC producers such as Russia.
“The market of course is under pressure in anticipation of this Doha meeting,” Andy Lipow of Lipow Oil Associates said.
“Expectations are just so low that OPEC and non-OPEC producers will do anything with significant details attached to it,” he said.
“I actually expect they are to announce a freeze from levels of production seen in January or February or a combination of both, without assigning an actual number to it and leaving to the market to interpret how much production that actually means,” he said.
The market rose this week on optimism that major producers could agree on a production freeze to address the persistent global oversupply that has pushed prices down roughly 60 percent since the middle of 2014.
Analysts said the outcome of the meeting could send the market soaring or crashing.
OPEC kingpin Saudi Arabia insists it will not join an output freeze unless regional rival Iran does so. Iran, which is emerging from nuclear-related sanctions lifted in January, is expected to seek a waiver until its production reaches its pre-embargo levels.
In a surprise twist on Friday, Tehran announced that Iranian Oil Minister Bijan Zanganeh would not join the talks; instead its OPEC representative would attend.
In a statement carried by the Shana news agency, the Iranian ministry added: “Iran already announced it cannot join the plan to stabilize oil prices” while its output is still below pre-sanction levels.
While oil prices slide, disappointing US economic data once again gave gold a lift.
Gold futures rose for the first time in three sessions as reports on Friday showed manufacturing output unexpectedly declined last month by the most since February last year, while consumer confidence fell this month to the weakest in seven months.
The lower-than-expected US figures helped revive demand for gold, which had dissipated this month as signs of a resilient US expansion helped dent the metal’s appeal as a haven. Bullion capped its best quarter since 1986 last month amid financial-market tumult and concerns over the outlook for global economic growth at the start of the year.
“Weaker-than-expected US industrial data with lower revisions and a slide in sentiment has helped buttress the gold price,” said Tai Wong, director of commodity products trading at BMO Capital Markets in New York.
Gold futures for June delivery rose 0.7 percent to settle at US$1,234.60 an ounce at 1:41pm on the Comex in New York, trimming this week’s loss to 0.7 percent. The metal has fallen 0.1 percent this month, after jumping 17 percent last quarter.
Silver futures gained on the Comex. On the New York Mercantile Exchange, palladium futures advanced, while platinum slipped.
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