Oil trades near $47 amid talks to end Qatar boycott by Arab nations
New York: Oil traded little changed as diplomatic efforts to resolve a clash between Qatar and Saudi Arabia played out, with crude supplies seen as unaffected.Futures slipped as much as 1% in New York.
Kuwait’s ruler Sheikh Sabah Al Ahmad Al Jaber Al Sabah will travel to Saudi Arabia on Tuesday to mediate an end to the feud between Qatar and a Saudi-led alliance, which accuses the Gulf state of terrorism links.
Prices initially surged on Monday before settling lower as the spat was seen having a limited impact on oil supply. Meanwhile, investors remain focused on how the clash could affect the Organization of the Petroleum Exporting Countries (Opec)-led deal to reduce output.
“It’s an unnerving time to see these key gulf producers expressing so much enmity at this point,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. “The market’s seeing the real risk as being a lack of compliance or a lost deal right now as opposed to supplies being disrupted by hostilities.”
Oil has traded below $50 a barrel amid speculation that rising US supply will counter an extension of production curbs by Opec and its partners, including non-Opec member Russia. While American stockpiles have recently edged lower, output from the country has expanded to the highest since August 2015.
West Texas Intermediate (WTI) for July delivery declined 13 cents to $47.27 a barrel at 9:50 am on the New York Mercantile Exchange. Total volume traded was about 32% above the 100-day average. The contract fell 26 cents to $47.40 on Monday, the lowest close since May 10.
Brent for August settlement dropped 22 cents to $49.25 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $1.83 to WTI for the same month.
Saudi Arabia port authorities say no vessels will be allowed coming from or going to Qatar, regardless of flag or owner nationality, Inchcape Shipping Services said on its website. Qatar is committed to the global oil-cuts deal, with a compliance rate of 93% to 102%, Kuwait’s oil minister Issam Almarzooq told official news agency KUNA.
US crude inventories probably dropped by 3.5 million barrels last week, a ninth straight decline, according to a Bloomberg survey before the release of data from the Energy Information Administration on Wednesday.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, probably decreased by 750,000 barrels, according to a forecast compiled by Bloomberg. American production has expanded to 9.34 million barrels a day, according to the EIA. Bloomberg