Oil Market Wobbles

(@ChaudhryMAli88)

Oil market wobbles

LONDON, (APP - UrduPoint / Pakistan Point News -6th Sept,2016) : Oil wobbled Tuesday as traders mulled a pledge from Russia and Saudi Arabia to address the chronic supply glut that has hammered the market in recent years.

At 1130 GMT, US benchmark West Texas Intermediate for October delivery was 50 cents higher at $44.94 a barrel. Brent North Sea crude for November fell 19 cents to $47.44 a barrel compared with Monday's close.

Prices had surged Monday on news that Saudi Energy Minister Khaled Al-Falih and Russian counterpart Alexander Novak were to make a joint announcement after meeting on the sidelines of the G20. However, the bumper gains were all but wiped out after the statement underwhelmed the market and provided scant detail about their plans.

The pair agreed to "act together" to steady the market -- but stopped short of a production freeze. "Oil prices have again shed some of the significant gains they achieved yesterday," said Commerzbank analyst Carsten Fritsch.

"Russia and Saudi Arabia agreed on the fringes of the G20 meeting in China to cooperate on the global oil market. No concrete steps have been decided as yet, however, so nothing is likely to change in the short term.

"Saudi Arabian Energy Minister Falih does not even see any need at present to freeze oil production," he added. Falih and Novak said they will act "together or in cooperation with other oil producers" and agreed to set up a "joint monitoring group" to offer recommendations to prevent price fluctuations.

The Organization of the Petroleum Exporting Countries (OPEC), the 14-nation cartel which produces about one third of the world's oil, will meet Russia later this month in Algiers to discuss a possible output freeze in order to boost prices.

The previous attempt at reaching a deal in April was scuppered by OPEC member Iran's refusal to agree to any output freeze, and there are worries about the chances of an agreement in Algiers. Separately Tuesday, Iran's oil minister Bijan Zanganeh said the Islamic republic "supports any decision to return stability to oil markets", adding that $50-60 per barrel is the "desired price" for most OPEC members.

Zanganeh, speaking after a meeting with OPEC secretary-general Mohammed Barkindo in Tehran, said $55 per barrel "brings desired, economic and beneficial oil production revenue for OPEC members, while their competitors won't be able to increase production".

Iran briefly triggered a spike in prices late last month when it announced it would participate in the meeting, but Zanganeh stated on August 26 that Iran wanted to return to its pre-sanctions share of the crude market before considering any kind of cap. A previous OPEC attempt to freeze output collapsed in April, largely because of Iran's refusal to join talks.