Oil fell on Monday, with New York prices briefly ducking underneath $ 30 amid a broader selloff on global stock markets, as hopes of an output cut 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 market kicked lower in European deals as equities fell and doubts emerged over a long-awaited deal between OPEC and non-OPEC oil producing nations.
US benchmark West Texas Intermediate for March delivery sank to $ 29.57 per barrel, before pulling back slightly to stand at $ 30.21, down 68 cents from Friday’s closing level.
Brent North Sea crude for delivery in April (LSE: 0N69.L – news) meanwhile slid 56 cents to $ 33.50 a barrel in late afternoon London trade.
“Oil prices have been unable to further extend their recent gains and are now down for the third consecutive session with WTI trading at $ 30 a barrel again,” said analyst Fawad Razaqzada at trading firm City Index.
“It looks like oil traders are once again discouraged by… the lack of any breakthrough in talks between some OPEC and non-OPEC producers.”
– ‘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.”
He added: “The worry is that investors are just catching their breath until a further move lower continues.”
Major exporter Saudi Arabia announced discussions between Ali al-Naimi and his Venezuelan opposite Eulogio Del Pino on Sunday to discuss the South American country’s talks with other producers to boost prices.
The recent plunge in oil prices to 12-year lows — owing to a severe supply glut, weak demand and the strong dollar — has hammered producer nations such as Venezuela and Nigeria which rely on precious revenues from the commodity to fuel their economies.
However, the OPEC producers’ group — of which Saudi Arabia is the key member — has refused to cut output as it looks 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.
The dollar had climbed after the Labor Department said Friday that the US jobless rate had fallen to an eight-year low and wage growth picked up.
That fuelled speculation of another Fed rate hike, which attracts investors to the dollar. A strong greenback makes dollar-priced oil more expensive for customers using weaker currencies (Other OTC: UBGXF – news) .
