Oil futures fell ahead of a weekend meeting by OPEC countries to discuss progress on talks on a production cap.
The meeting is seen as being a bit problematic as more signs emerge that not all OPEC members are on the same page when it comes to sharing a cut or limit around evenly.
Russian production cuts are still thought possible, but no one is confident that Russia will agree to cap their production after months pf steady expansion.
As a result, December West Texas Intermediate crude futures dropped $US1.02, or 2.1%, to $48.70 a barrel in New York, for a loss of 4.2%, the first weekly fall in six weeks. FactSet data says WTI futures are still up 1% for October with a day of trading to go.
In London, December Brent crude futures fell 76 cents, or 1.5%, to settle at $US49.71 a barrel, a fall of 4% for the week. Oil traders ignored a fall of 2 (to 411) in the number of active oil drilling rigs in the US according to Baker Hughes’ weekly report.
That was the first weekly decline since June. (And late on it was reported that Friday General Electric was talking to Baker Hughes about a possible combination of the two companies oil and gas assets).
This weekend meeting of oil officials from OPEC member countries in Vienna discussed the production proposal.
Reuters reported that an OPEC-only meeting of officials to work out the details of a plan to reduce oil production failed to reach agreement after hours of talks amid objections by Iran which has been reluctant to even freeze its output levels.
OPEC agreed last month in Algiers to reduce member oil production to between 32.50 million and 33 million barrels a day, which would be the group’s first output cut since 2008.
The discussions will be followed by another meeting between OPEC members and non-cartel producers, such as Russia (but not the US).
OPEC is expected to make a formal announcement on November 30 on the fate of the deal. If successfully ratified next month, it would be the first production cut agreement among oil producers in eight years.
But analysts point out that divisions within OPEC are becoming more apparent, with Iraq’s request for exemption earlier this week. If that is given, there will be no chance for any agreement, especially with the Saudis unlikely to want to give any leeway to a Shia country like Iraq, and its friend, Iran.
And even if there is agreement within OPEC for some sort of arrangement there is still the question of a deal with Russia which remains financially strained and looking to maximise income.
On Thursday, Reuters reported that energy ministers from Persian Gulf members of OPEC, including Saudi Arabia, had told Russia that they are willing to cut 4% from their peak oil output.
Meanwhile Comex gold futures finished higher on Friday night, notching up a third weekly gain in a row and the highest close in nearly four weeks.
Weakness in the US dollar and a new FBI probe into Hillary Clinton’s emails raised gold’s appeal in afternoon trading.
Comex futures had traded lower before and in the immediate wake of data showing the American economy in the third quarter grew at its fastest pace in two years (2.9% annual) – in line with market expectations.
December gold rose $US7.30, or 0.6%, to settle at $US1,276.80 an ounce – it’s highest finish since the start of this month.
Futures ended the week with a gain of roughly 0.7% – the third weekly gain in a row. But they remain down around 3% in the month to date.
Comex December silver futures rose 15.7 cents, or 0.9%, to finish at $US17.796 an ounce.
Silver saw a 1.7% weekly gain but remained down by more than 7% so far in October with a day to go. But probably the most interesting move was in copper.
On Friday Comex December copper added 3 cents, or 1.4%, to $US2.194 a pound.
That was a rise of just on 5% for the week, one of the biggest weekly rises for some month
Copper prices have been pressures by weak demand from China and the higher dollar, and last week’s gain stood out because those reasons haven’t changed.
