Oil falls as Saudi Arabia douses expectations for output freeze

Saudi minister tempers hopes of strong market intervention
Oil falls as Saudi Arabia douses expectations for output freeze
Saudi Arabias minister of energy Khalid A Al-Falih. (Joe Klamar/AFP/Getty Images)
By Reuters
Sun 28 Aug 2016 08:59 AM

The price of oil is on course for its largest weekly decline in a month after the Saudi energy minister watered down expectations that the world's largest producers might agree next month to limit their output.

Brent crude futures were down 6 cents at $49.61 per barrel by 1339 GMT, having recovered from a session low at $49.12. West Texas Intermediate (WTI) crude nudged into positive territory, up 9 cents at $47.42 a barrel.

Saudi Arabian Energy Minister Khalid Al-Falih said late on Thursday: "We don't believe any significant intervention in the market is necessary other than to allow the forces of supply and demand to do the work for us."

He said the "market is moving in the right direction" already.

Members of the Organisation of the Petroleum Exporting Countries will meet on the sidelines of the International Energy Forum, which groups producers and consumers, in Algeria from Sept. 26-28.

The Saudi minister's comments dampened expectations of a meaningful intervention into the market, which has been dogged by oversupply for more than two years.

The price of crude oil has fallen more than 3 percent so far this week, putting it on course for its largest one-week slide in a month.

"This week has clearly been a tug of war between fundamentals and this continued 'verbal intervention' that we've seen from various OPEC members," Saxo Bank senior manager Ole Hansen said.

"All in all, it's left the market relatively close to the $50 mark, which in my opinion is probably as much as OPEC can ask for at this point."

Iran said on Friday that it would cooperate with other producers to stabilise oil markets, but added that it expected others to respect its individual rights.

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