Oil trades near $49 as Russia, Kuwait question producers on output cuts

OIL traded near $49 a barrel, as officials from Russia and Kuwait conducted meetings in Abu Dhabi with producers to examine why some are shirking their commitment to reduce output.

Futures lost 0.2 percent in New York after dropping 0.4 percent on Monday. Talks are being held separately with representatives from Iraq, the United Arab Emirates and Kazakhstan through Tuesday, according to people familiar with the matter. US crude stockpiles probably declined by 2.1 million barrels last week, a Bloomberg survey shows before government data on Wednesday.

Oil in New York was unable to hold its first advance above $50 a barrel since May as signs of rising global supply eroded optimism that output curbs by the Organization of Petroleum Exporting Countries  (Opec) snd its partners are rebalancing the market.  Compliance by Opec members slid to 78 percent in June, according to the International Energy Agency (IEA).

“The market will look for confirmation that the group will continue to abide by their cuts,” said David Lennox, a Sydney-based analyst at Fat Prophets. “Oil prices will probably do some work between $45 and $55 for some time.”

West Texas Intermediate (WTI) for September delivery was at $49.29 a barrel on the New York Mercantile Exchange, down 10 cents, at 7:45 a.m. in London. Total volume traded was about 24 percent below the 100-day average. Prices lost 19 cents
to $49.39 on Monday.

Brent for October settlement dropped 14 cents to $52.23 a barrel on the London-based ICE Futures Europe exchange. Prices slid 5 cents to $52.37 on Monday. The global benchmark traded at a premium of $2.81 to October WTI.

Findings from the meetings will be presented to the Joint Ministerial Monitoring Committee, which oversees the agreement to cut production, the people said, asking not to be identified because the talks are private.  Iraqi compliance slumped to 29 percent in June, its lowest so far, while the UAE made just 60 percent of its cuts, according to the IEA.

China’s crude imports in July fell to the lowest in six months after heavy buying earlier in the year, according to data from the General Administration of Customs released on Tuesday. Saudi Arabia is said to have cut crude sales for next month to some buyers in Asia, limiting sales to prized customers as part of its pledge to curb exports and shrink a global glut. Libya’s biggest oil field Sharara is “back to normal” after a disruption caused by protests in the politically fragmented country, the state National Oil Corp. said.