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Oil Trades Near $44 as U.S. Output Falls, More Freeze Talks Seen

published Apr 20th 2016, 7:03 pm, by Stephen Stapczynski

(Bloomberg) —
Oil traded near $44 a barrel after U.S. crude production slipped to the lowest since October 2014 and Iraq said producers plan a new push to agree on an output freeze in talks as early as next month.

Futures fell as much as 0.9 percent in New York. The May contract, which expired Wednesday, jumped 3.8 percent to close at the highest level since November after the Energy Information Administration reported crude output fell to 8.95 million barrels a day in the week ended April 15. Major OPEC and other crude producers will meet in Russia, possibly in May, in an effort to agree on an output cap, Iraq’s Deputy Oil Minister Fayyad Al-Nima said.

Talks between some of the world’s largest producers in Doha on Sunday to freeze production failed after Saudi Arabia said it wouldn’t restrain output without commitments from all Organization of Petroleum Exporting Countries members, including Iran, which has ruled out freezing for now. U.S. production dropped for the 12th time in the last 13 weeks, according to a U.S. government report on Wednesday.

“Yesterday’s production numbers were pretty positive for the oil price,” Angus Nicholson, an analyst at IG Ltd., said by phone. “Given all of these developments and the momentum that we are seeing behind the oil price, especially considering the failure of the Doha deal, $40 may increasingly look like a much stronger floor if we do manage to stay above it for the next week or two.”

West Texas Intermediate for June delivery dropped as much as 40 cents to $43.78 a barrel on the New York Mercantile Exchange and traded at $43.91 by 8:40 a.m. Tokyo time. The May contract increased $1.55 to close at $42.63 a barrel on Wednesday. Total volume traded was about 71 percent below the 100-day average.

Brent crude for June settlement gained 4 percent to settle at $45.80 on Wednesday, the highest close since Nov. 25. The global benchmark closed at a $1.62 premium to June WTI.

To contact the reporter on this story: Stephen Stapczynski in Tokyo at sstapczynsk1@bloomberg.net To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net Aaron Clark, Sungwoo Park

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