Oil Prices Lose Steam on Supply Growth
August 24 2016 - 12:05AM
Dow Jones News
By Jenny W. Hsu
Oil prices pared overnight gains and moved lower in Asia morning
trade on Wednesday, as reports of additional growth in U.S. crude
stocks wiped out optimism that Iran could agree to a production
freeze accord.
An Organization of the Petroleum Exporting Countries delegate
told the Wall Street Journal that Tehran had sent a letter to OPEC
members that it would attend the informal meeting next September in
Algeria. If confirmed, it could signal a reversal in Iran's stance,
as it had declined to attend the last informal meeting back in
April where a production freeze pact was discussed.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in October traded at $47.68 a barrel at 0148 GMT, down
$0.42 in the Globex electronic session. October Brent crude on
London's ICE Futures exchange fell $0.33 to $49.63 a barrel.
While Iran's latest show of willingness boosted prices
overnight, analysts are skeptical that any policy changes will
result from the meeting.
"This is deja vu all over again, a replay of what we saw four
months ago," said John Driscoll, chief strategist at JTD Energy,
referring to the meeting in April in Doha in which OPEC members and
Russia had nearly reached an agreement to limit production at the
January level. The plan was thwarted last minute when Saudi Arabia,
OPEC's biggest producer and de facto leader, withdrew from the
agreement after Iran refused to comply with any production
caps.
However, with Iran's present production level at around 3.6
million barrels a day, the market has higher hopes that Tehran
would be more receptive to the pact this time around.
"Now they have regained market share, it would benefit them to
move the prices higher," said Grace Liu, the head of research at
Guotai Junan International, but added the long-term political
rivalry between Saudi Arabia and Tehran remains a major road block
for any agreement.
The bullish sentiment overnight was pared by the bearish
estimated growth in U.S. crude stockpiles last week. American
Institute Petroleum data showed an increase of 4.5 million barrels,
while gasoline stocks fell by 2.2 million barrels, according to
market participants.
Official data by the U.S. energy department will be released
later today.
Nymex reformulated gasoline blendstock for September--the
benchmark gasoline contract--fell 110 points to $1.4878 a gallon,
while September diesel traded at $1.4959, 59 points lower.
ICE gasoil for September changed hands at $437.00 a metric ton,
down $3.25 from Tuesday's settlement.
Write to Jenny W. Hsu at jenny.hsu@wsj.com
(END) Dow Jones Newswires
August 23, 2016 23:50 ET (03:50 GMT)
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