By Barani Krishnan
Investing.com - They can’t even agree on when to meet, let alone how much to cut --that’s costing OPEC by the barrel.
Crude prices fell almost 2% on Monday after a Reuters report that Iran and Russia ended talks without deal on when the next OPEC+ meeting is to be held.
Saudi Energy Minister Khalid al-Falih indicated at the weekend that the June 25 OPEC meeting and the June 26 conference of the cartel with its non-member allies called OPEC+ was more or less off because Russia wasn’t agreeable to those dates. The Saudis lead OPEC, but Iran is an important member being the world’s fourth-largest crude exporter. Russia is also a key OPEC ally, being the second-largest oil exporter after the United States.
U.S. West Texas Intermediate crude settled down 58 cents, or 1.1%, at $51.93 per barrel.
U.K. Brent slid $1.08, or 1.7%, to $60.93 per barrel by 3:00 PM ET (17:30 GMT).
WTI lost about 3% last week and Brent nearly 2% on worries about whether OPEC and its allies will be able to meet soon and agree on new production cuts to offset surging supplies of crude in the U.S. and elsewhere. Last week’s losses in crude came despite attacks on oil tankers in the Gulf of Oman that sent crude prices higher in the last two days of the week.
“The attacks on the oil tankers was a major event but the rising stocks of the last few weeks helped to mute the price impact of that attack,” said Olivier Jakob, founder of Zug, Switzerland-based oil market consultancy PetroMatrix.
U.S. crude stockpiles have grown by a net of some 33 million barrels over the past 12 weeks, crossing into the current peak driving season in the United States, when demand for gasoline should be at the year’s highs. On the global economic end, the U.S.-China trade war has intensified with no end in sight after more than a year of tit-for-tat tariffs that have raised fears of a worldwide recession.
China’s industrial output grew by just 5% in May, the slowest in more than 17 years, according to data from the National Bureau of Statistics on Monday that reinforced fears about the negative impact of the trade war. Analysts had expected an industrial output expansion of 5.5%, but the figure came in even below April’s 5.4%.
Adding weight to Monday’s gloom in oil was a poor showing by the Empire State Manufacturing Index for the New York area, which unexpectedly suffered its biggest fall on record to its lowest level since October 2016.
“The market is not only desensitized to geopolitics, but also beat up so badly on being long that there were no buyers,” said Scott Shelton, energy futures broker at ICAP (LON:NXGN) in Durham. N.C.
“Algos, negative gamma and noise were the drivers … with most of the ‘Old Guard traders’ talking about the potential of the market, but on the sidelines," added Shelton."The largest position change in the market can only come from computers and sadly, computers are more afraid of more algorithms than an attack on a few tankers in the Gulf of Hormuz.”