Oil halted its advance near $50 a barrel, as Iraq threatened to derail the plan of the Organization of Petroleum Exporting Countries (Opec) to stabilize crude markets by saying it should be exempt from planned output cuts.
Prices slid as much as 0.7 percent in New York after rising 0.4 percent on Friday. Iraq should be exempted from trimming production because it’s embroiled in a war with Islamic militants, Oil Minister Jabbar Al-Luaibi said on Sunday at a news conference in Baghdad. Rigs targeting crude in the US rose for an eighth week to the highest level since February, according to Baker Hughes Inc.
Oil has fluctuated near $50 a barrel amid uncertainty about whether the Opec can implement an accord to reduce oil output when they gather at an official meeting in November. A committee will meet later this month to try to resolve differences over how much individual members should pump.
“The mind-set of the market at this stage is to wait for the actual outcome of the November meeting,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “Oil will probably hold around $50 a barrel, but the short-term risk looks to the downside. Implementation of the output deal will probably be left to Saudi Arabia and a couple of others.”
West Texas Intermediate (WTI) for December delivery lost as much as 34 cents to $50.51 a barrel on the New York Mercantile Exchange, and was at $50.64 at 9:30 a.m. in Hong Kong. Front-month futures gained 1 percent last week to close at $50.85 on Friday. Total volume traded was about 50 percent below the 100-day average.
Brent for December settlement slid as much as 31 cents, or 0.6 percent, to $51.47 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of 96 cents to WTI.
Iraq is not going to reduce the achieved oil production level of 4.7 million barrels per day, the media reported on Sunday, citing Falah Al-Amri, the head of the state-backed Iraqi company State Oil Marketing Organization.
“We have passed 4.7 million barrels a day … We are not going back. It’s a question of sovereignty,” Al-Amri said at the press conference in Baghdad as quoted by Bloomberg.
On September 28, member-states of the Opec agreed on cutting its oil production for the first time in eight years. The output ceiling was set at 32.5-33 million barrels a day for the whole cartel, however, no exact limits for each country have been placed.
The Opec countries are set to finalize the agreement on oil output freeze at the Opec summit in Vienna on November 30. Other oil producing states, who are not members of Opec, including Russia, are also expected to uphold the agreement, aimed at stabilizing the oil market.
Bloomberg News, PNA