NEW YORK: Oil prices were on track to their largest weekly advance in more than month on Friday, supported by planned OPEC output cuts, but profit-taking after a two-day rally kept benchmark crude contracts below the key $50 per barrel mark.
Both Brent and US crude’s West Texas Intermediate (WTI) futures showed gains of 7 percent or more on the week after the Organization of the Petroleum Exporting Countries surprised oil traders and investors on Wednesday with a preliminary agreement to remove some 700,000 barrels per day (bpd) from the market.
On Friday, the two benchmarks diverged.
Brent’s front-month contract for November was down 34 cents, or 0.7 percent, at $48.90 a barrel by 1626 GMT ahead of its expiry at Friday’s settlement. For the week, it was up 7 percent, its most since the week ended Aug. 19.
WTI’s front-month rose 24 cents, or 0.5 percent, to $48.07 per barrel. It gained 8 percent on the week, also the most in six weeks.
For the quarter, Brent was down about 1 percent and WTI about 0.5 percent lower.
While profit-taking weighed on Brent and WTI for the day, the market’s downside was also limited by a rise in Wall Street shares and drop in the dollar after weak US consumer spending data suggested the Federal Reserve might be cautious in raising interest rates in the near term.
OPEC said it has achieved agreement in principle to cut output to 32.5-33.0 million barrels per day (bpd) from about 33.5 million bpd, estimated by Reuters to be August’s production level.
Production quotas for each member and other details will be finalized at the group’s policy meeting in November, OPEC officials said.
A persistent oil supply glut has brought crude prices from mid-2014 highs above $100 to below $50, forcing OPEC into the cuts.
Russia, not an OPEC member but a large producer pumping crude at record highs, said it would find a way to freeze production if it manages to reach a deal with OPEC.
The US, also a non-OPEC member and now the world’s biggest oil producer, said it had little faith the plan would work.
“During October and November the OPEC countries will work out the specific parameters of their proposal,” Russian news agency Interfax quoted Energy Minister Alexander Novak as saying. “We are talking about maintaining levels at volumes that have been reached, but it is still being discussed at what level,” Novak said, insisting he “would not comment on specific levels.”
Moscow — which is currently producing record amounts of oil — has previously backed a plan to freeze production in a bid to bolster prices.
Novak told TASS that a working group of experts from Russia and Saudi Arabia was expected to hold its first meeting in early October after the two sides earlier this month pledged to work together to stabilize markets.
Amos Hochstein, the US energy envoy, said in a Reuters interview that price gains from the cuts would trigger higher US production that ultimately defeats the deal.
Both Brent and US crude’s West Texas Intermediate (WTI) futures showed gains of 7 percent or more on the week after the Organization of the Petroleum Exporting Countries surprised oil traders and investors on Wednesday with a preliminary agreement to remove some 700,000 barrels per day (bpd) from the market.
On Friday, the two benchmarks diverged.
Brent’s front-month contract for November was down 34 cents, or 0.7 percent, at $48.90 a barrel by 1626 GMT ahead of its expiry at Friday’s settlement. For the week, it was up 7 percent, its most since the week ended Aug. 19.
WTI’s front-month rose 24 cents, or 0.5 percent, to $48.07 per barrel. It gained 8 percent on the week, also the most in six weeks.
For the quarter, Brent was down about 1 percent and WTI about 0.5 percent lower.
While profit-taking weighed on Brent and WTI for the day, the market’s downside was also limited by a rise in Wall Street shares and drop in the dollar after weak US consumer spending data suggested the Federal Reserve might be cautious in raising interest rates in the near term.
OPEC said it has achieved agreement in principle to cut output to 32.5-33.0 million barrels per day (bpd) from about 33.5 million bpd, estimated by Reuters to be August’s production level.
Production quotas for each member and other details will be finalized at the group’s policy meeting in November, OPEC officials said.
A persistent oil supply glut has brought crude prices from mid-2014 highs above $100 to below $50, forcing OPEC into the cuts.
Russia, not an OPEC member but a large producer pumping crude at record highs, said it would find a way to freeze production if it manages to reach a deal with OPEC.
The US, also a non-OPEC member and now the world’s biggest oil producer, said it had little faith the plan would work.
“During October and November the OPEC countries will work out the specific parameters of their proposal,” Russian news agency Interfax quoted Energy Minister Alexander Novak as saying. “We are talking about maintaining levels at volumes that have been reached, but it is still being discussed at what level,” Novak said, insisting he “would not comment on specific levels.”
Moscow — which is currently producing record amounts of oil — has previously backed a plan to freeze production in a bid to bolster prices.
Novak told TASS that a working group of experts from Russia and Saudi Arabia was expected to hold its first meeting in early October after the two sides earlier this month pledged to work together to stabilize markets.
Amos Hochstein, the US energy envoy, said in a Reuters interview that price gains from the cuts would trigger higher US production that ultimately defeats the deal.
