Sun, Oct 09, 2016 - Page 14 News List

Oil declines after Russia sees no deal with OPEC


Oil fell below US$50 a barrel after Russia cast doubt over a deal any time soon with OPEC, following the group’s pledge to reduce production.

Futures slipped 1.3 percent in New York after closing above US$50 for the first time since June on Thursday.

OPEC agreed in Algiers last week to cut output in a bid to shrink the crude glut and boost prices.

Russian Minister of Energy Alexander Novak on Friday said he does not expect to sign a deal with OPEC during the World Energy Congress next week in Istanbul.

Price declines accelerated earlier when the US dollar hit the highest level in more than two months, reducing the appeal of commodities, before reversing the gains.

“Prices fell after Russia quashed hopes that a deal would be sealed in Istanbul,” said John Kilduff, a partner at Again Capital LLC, a New York hedge fund focused on energy.

Oil has gained about 13 percent since the OPEC agreed on Sept. 28 to cut production for the first time in eight years. OPEC, which pumped at a record last month, is to decide on quotas at an official meeting of the group in Vienna on Nov. 30.

West Texas Intermediate for November delivery slipped US$0.63 to close at US$49.81 a barrel on the New York Mercantile Exchange, after touching US$50.74 in early trading. Total volume traded was 22 percent above the 100-day average. Prices climbed 3.3 percent this week.

Brent for December settlement fell US$0.58, or 1.1 percent, to US$51.93 a barrel on the ICE Futures Europe exchange in London. Prices climbed to US$52.84 earlier.

The bilateral meetings Novak would hold with OPEC ministers in Istanbul will be an “important step toward reaching an agreement on capping oil production,” his ministry said later in a statement.

Russia sees the possibility of a deal being reached by the time the group meets in Vienna, it said.

US crude inventories dropped by 2.98 million barrels to 499.7 million barrels, the US Energy Information Administration reported Wednesday.

The number of oil rigs operating in the country climbed to the highest since February this week, rising by three to 428, according to Baker Hughes Inc.

Gold had the biggest weekly loss in more than three years as investors judged that a weaker-than-expected US payrolls report will not be enough to sidetrack the US Federal Reserve from raising interest rates this year.

Cleveland Fed President Loretta Mester on Friday said that there is a “strong, compelling case” to raise interest rates.

Mester spoke after a US Department of Labor report on Friday showing slower, but still steady job gains in the US last month.

Higher interest rates curb the appeal of gold, which does not pay interest.

After the best first half in almost four decades, the gold rally has faltered as improved US economic data fueled bets that policy makers would soon lift rates.

The odds of a rate hike by December climbed to 66 percent, from 59 percent a week ago, Fed funds futures data showed.

“This is a response to the data being fairly okay and people being quite convinced that the Fed is on its way to tightening in December,” Bart Melek, head of commodity strategy at TD Securities in Toronto, said in a telephone interview.

Gold futures for December delivery slipped 0.1 percent to settle at US$1,252 an ounce at 1:40pm on the Comex in New York, taking this week’s loss to 5 percent, the worst for a most-active contract since September 2013.

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