Oil prices dip amid doubts about producer meeting

An oil rig. (AFP Photo)

NEW YORK: World oil prices dipped Thursday (Mar 10) as doubts rose about whether key producers led by Russia and Saudi Arabia would meet this month to discuss crude output limits.

But markets still held onto most of their recent gains with London benchmark Brent staying above the US$40 a barrel line.

At the close in New York, West Texas Intermediate crude for delivery in April was down 45 cents from Wednesday at US$37.84 a barrel. Brent North Sea crude for May delivery lost US$1.02 at US$40.05 a barrel in London.

Andy Lipow of consultancy Lipow Oil Associates tied the fall to reports that a meeting of top producers to address the market glut, thought to be under preparation for March 20, was less likely to take place as Iran has declined to agree to a production cap.

"The market was selling off today a little bit because there's some skepticism whether there is actually going to be a meeting in Russia on March 20," Lipow said.

"If that's the case, it would show that there's still some discord between OPEC and non-OPEC producers about where production levels are headed," he said.

The idea of freezing output surfaced in discussions led by Saudi Arabia and Russia in February after an increase in global production January added to the supply glut.

Iran, analysts think, does not want to join as its rebuilds market share after the West lifted nuclear sanctions on its exports in January.

"It appears Iran's unwillingness to even consider an output freeze has derailed the meeting and could even scupper the freeze itself," said Jasper Lawler at CMC Markets.

Still, crude prices held at their best levels since the beginning of the year, supported by signs that US output is falling in reaction to low prices and, possibly, that Beijing is doing enough to counter major crude importer China's economic slowdown.

Others had doubts, though. "I'm still not leaning towards prices moving up sustainably because the fundamentals have not changed," said Phillip Futures analyst Daniel Ang.