Oil fell as Iraq, OPEC’s second-biggest producer, threatened to derail the group’s plan to stabilize crude markets by saying it should be exempt from planned output cuts.
Futures dropped as much as 1.5 percent in New York. Iraq should be excluded from production curbs because it’s embroiled in a war with Islamic militants, Oil Minister Jabbar Al-Luaibi said Sunday in Baghdad. Russia refused again on Sunday to commit to joining OPEC in trimming production. Rigs targeting crude in the U.S. rose for an eighth week, according to Baker Hughes Inc.
Oil has fluctuated near $50 a barrel amid uncertainty about whether the Organization of Petroleum Exporting Countries can implement an accord to reduce output when members gather at an official summit in November. A committee will meet later this month to try to resolve differences over how much individual countries should pump. Drillers in the U.S. are returning rigs to shale areas as recent gains in oil provide more cash to raise output.
"We’ve had a big run up in anticipation of OPEC cuts, but nothing has happened yet," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. "There are a lot of negotiations ahead."
West Texas Intermediate for December delivery slipped 58 cents, or 1.1 percent, to $50.27 a barrel at 9:36 a.m. on the New York Mercantile Exchange. Total volume traded was 54 percent above the 100-day average.
Brent for December settlement fell 43 cents, or 0.8 percent, to $51.35 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a 1.08 premium to WTI.
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Iraq disputes OPEC figures that peg the nation’s output at less than 4.2 million barrels a day, Al-Luaibi said. The country is producing more than the 4.7 million barrels a day it pumped in September, he said. Iran, Nigeria and Libya are the only nations currently exempt from the proposed production cuts.
“Iraq’s request to be exempted from a deal to cut output has further clouded the prospect of OPEC strategy to stabilize the oil market succeeding,” said Jens Naervig Pedersen, a Copenhagen-based analyst at Danske Bank A/S. “At the same time, the oil-rig count indicates that U.S. shale producers are slowly returning, making OPEC’s life even more difficult.”
- Iran hopes Russia will cooperate with OPEC, Iranian Oil Minister Bijan Namdar Zanganeh said in Tehran.
- Iran will “go along” with OPEC’s goal of balancing the market, state news agency IRNA reported, citing Deputy Oil Minister Amir Hossein Zamaninia, who expects a “fair” oil price of $55 to $60 by 2017.
- Russia is still in talks with OPEC about production and “many scenarios” are being discussed, Energy Minister Alexander Novak said after meeting his counterparts in Riyadh.
- Libyan oil output will rise to 600,000 barrels a day “soon” and may reach 900,000 barrels if the El Sharara and El Feel fields reopen, Prime Minister Fayez al-Sarraj said on state television.
- China’s imports of crude from Russia fell to 3.96 million tons in September, 2.1 percent lower than a year earlier, according to data from the General Administration of Customs.