Oil prices fell sharply on late Friday, wiping out much of the week’s gains, after reports that Saudi Arabia is downplaying prospects of a producers deal on output next week.
The key benchmarks Brent crude and West Texas Intermediate (WTI) both lost more than 3 percent in Friday’s trading, as earlier hopes faded for the informal meeting of OPEC producers and Russia in Algiers.
The losses came after Bloomberg reported that an OPEC delegate “familiar with Saudi Arabian policy” said Riyadh did not expect any deal to limit output.
Earlier, the market had been encouraged by another unconfirmed report that the Saudis were talking with Iran about a mutual deal to freeze production.
For the day, US benchmark West Texas Intermediate for delivery in November lost US$1.84 cents to US$44.48 a barrel in New York trade.
In London, Brent North Sea crude for November delivery shed US$1.76 to US$45.89 a barrel.
“I think the biggest factor is here that the market does not believe at this point that there could be some sort of agreement surrounding the production freeze by OPEC producers,” Bart Melek at TD Securities said.
An earlier Saudi-led attempt to freeze output fell apart in April after Iran refused to participate, saying it needed to raise production depleted by years of Western economic sanctions, which were lifted in January.
“A deal to freeze production should give oil prices a significant boost, while if there is no deal, then expect to see a big drop, at least in the short-term,” Forex.com market analyst Fawad Razaqzada said.
For the week, Brent prices were slightly higher, up 0.3 percent from Sept. 16, while WTI rose 3.4 percent.
Support came from data showing US commercial inventories fell more than 6 million barrels last week, suggesting stronger demand.
Gold is on a roll, courtesy of the US Federal Reserve.
The precious metal is heading for the biggest weekly advance since July after US central bankers opted to leave interest rates unchanged while reining in their outlook for future increases.
Investors added 6.3 tonnes to exchanged-traded funds backed by gold this week through Thursday, data compiled by Bloomberg show.
Bullion has awakened from a slumber after Fed rate concerns had helped wipe out gains for the quarter. Money is pouring back in as low borrowing costs in the US and economic stimulus by central banks from Japan to Europe drive demand for the precious metal as a store of value.
“The fact that they didn’t raise rates breathes some life back into the gold market,” Bob Haberkorn, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “Traders are in a ‘buy and hold’ mode right now. They’re looking at adding to positions.”
Gold for immediate delivery slipped less than 0.1 percent to US$1,336.48 an ounce at 1:55pm in New York, after four straight gains.
Prices climbed 2 percent this week, according to Bloomberg generic pricing.
Gold futures for December delivery had a 2.4 percent advance this week, the biggest rally since June 10.
On Friday, a Markit Economics’ purchasing-managers index expanded at a slower pace than economists forecast. Signs of weakness in manufacturing bolster the case for keeping borrowing costs low, Haberkorn said.
“The inaction by the Fed revived investor appetite for gold,” Australia & New Zealand Banking Group Ltd said in a note. “While a cut in the Fed’s outlook for rates and the weaker US dollar no doubt played a part, the continued efforts by Bank of Japan to bolster economic stimulus also helped.”
Other precious metals:
Silver futures slipped on the Comex in New York.
On the New York Mercantile Exchange, platinum futures declined, while palladium futures rose.
A gauge of 14 senior global gold producers declined 2.2 percent, paring this week’s gain to 5.1 percent.
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