Oil prices slide as output cut hopes fade

8th February 2016, Comments 0 comments

Oil prices sank Monday, matching a fierce selloff on stock markets, as hopes of a cut to crude output faded.

Prices had rebounded in Asian trading hours after OPEC producers Saudi Arabia and Venezuela held talks on the beleaguered market, raising hopes of production cutbacks.

However, the oil markets were down about 2.5 percent in European deals as equities fell and doubts emerged over a long-awaited deal between OPEC and non-OPEC oil producing nations.

In midday deals in London, Brent North Sea crude for delivery in April was down 61 cents at $33.45 a barrel.

US benchmark West Texas Intermediate for March delivery lost 84 cents to $30.05 a barrel, compared with Friday's close.

Prices were down in part owing to "the lack of any breakthrough in talks" on possible cuts to crude output, said analyst Fawad Razaqzada at trading firm City Index.

He added that the market could rebound sharply if it hits the key psychological level of $30.

"All it takes is a big trade to trigger buying momentum again and at $30 a barrel, WTI is undoubtedly looking attractive for some speculators, especially those who missed out on the bounce in mid-January," Razaqzada said.

- 'Holding pattern' for prices -

James Hughes, analyst at traders GKFX, noted that the market was in a "holding pattern" awaiting supply-side news.

"Markets are looking to stay within the range despite (recent) heavy falls," he told AFP.

"$30 will be an important level for the next few months, if continued falls below the level are met by heavy buying."

Major oil exporter Saudi Arabia has meanwhile met with Venezuela amid market talk of a possible cut to crude production to help boost prices.

The recent plunge to 12-year lows -- owing to a severe supply glut, weak crude demand growth and a strong dollar -- has hammered OPEC nations such as Venezuela and Nigeria which rely on the commodity's income to fuel their economies.

However, the cartel's influential Gulf members are refusing to cut output as they look to maintain market share in the face of competition from US shale.

WTI is down almost 20 percent this year and Brent more than 10 percent.

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© 2016 AFP

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