Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil steadies as Kuwait strike offsets scuttled output-freeze plan

Published 04/18/2016, 12:52 PM
Updated 04/18/2016, 12:52 PM
© Reuters. Worker grabs a nozzle at a petrol station in Tehran

© Reuters. Worker grabs a nozzle at a petrol station in Tehran

By Barani Krishnan

NEW YORK (Reuters) - Oil prices steadied on Monday after a Kuwaiti workers' strike slashed the country's oil output by more than half, offsetting worries about a scuttled plan by major oil producers to freeze production.

The strike cut more than 60 percent Kuwait's crude output, lending support to price benchmarks such as Brent and Dubai. Supply of refined oil product from the country also tightened due to scaled-back refinery runs and lower fuel exports.

Brent tumbled as much as 7 percent earlier on Monday after oil majors from the Organization of the Petroleum Exporting Countries and non-OPEC Russia failed to reach agreement on a plan to freeze output.

The producers had gathered in Qatar, Doha at the weekend for what was expected to be the rubber-stamping of a deal to stabilize output at January levels until October. The deal crumbled when OPEC heavyweight Saudi Arabia demanded Iran join the plan, despite Tehran's repeated assertions it would not.

"The material loss in production from the Kuwait strike has helped the oil market forget about the farce from Doha," said Matt Smith, director of commodity research at the New York-headquartered Clipperdata.

Brent was up 20 cents, or 0.4 percent, at $43.30 a barrel by 12:32 p.m. EDT (1632 GMT). It had fallen $3 earlier in the session.

U.S. crude's West Texas Intermediate (WTI) benchmark was off 31 cents, or 0.8 percent, at $40.05 a barrel, after sliding to $37.61 at the day's low.

Brent's premium versus WTI was at its widest in nearly two months.

While fallout from the Doha plan could weigh on a nascent recovery in oil prices, the market may not tumble as much as it did earlier this year, when Brent hit 12-year lows of around $27 in late January, some analysts said.

"Gradually declining non-OPEC production as well as planned maintenance in the face of resilient oil demand in Q1 have recently pointed to improving oil fundamentals," analysts at Goldman Sachs (NYSE:GS) said in a note, referring to the first quarter.

A weakening U.S. dollar and the mostly steady climb in global equities since February was supportive to oil too, traders said.[USD/] (N)

"While a few forecasters may be dusting off some old $20 WTI expectations as a result of the Doha outcome, we expect solid support in nearby WTI at the $35 mark," Jim Ritterbusch at Chicago oil consultancy Ritterbusch & Associates said.

© Reuters. Worker grabs a nozzle at a petrol station in Tehran

WTI traded off Monday's lows after data from market intelligence firm Genscape showed crude inventories at the Cushing, Oklahoma delivery point for U.S. crude futures falling by nearly 860,000 barrels during the week to April 15, traders who saw the data said.

Latest comments

oil up this week just for options exp
let oil down .. I wish $SPX Crash to 1700 immediately ! . . I expect Dow Jones will crash to 14.000 sooner .. .
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.