Russian, Saudi oil ministers may gather at G-20 meeting: analyst
U.S. oil prices were clawing back gains Monday, after last week saw the worst one-day loss for the futures contract in roughly three years, as investors grappled with supply issues ahead of an OPEC meeting.
Prices look to recoup some of their hefty losses from late last week, but “the downward pressure on oil is still there from surging supply and a slowdown in demand growth, which is expected to result in an oil supply overhang by next year,” analysts at ICICI Bank wrote in a Monday note.
January West Texas Intermediate crude CLF9, +2.88% rose $1.70, or 3.4%, to $52.12 a barrel on the New York Mercantile Exchange. In a holiday-shortened session on Friday, the contract plunged 7.7% to settle at $50.42, marking the worst session since July 6, 2015 and the lowest settlement since Oct. 9, 2017, according to Dow Jones Market Data. It also marked the seventh-straight weekly drop—a fall of 10.6%.
Global benchmark January Brent LCOF9, +3.18% was also on the rebound Monday, up $2.10, or 3.6%, to $60.90 a barrel on ICE Futures Europe, after closing down 6.1%, to $58.80 a barrel on Friday. Brent lost nearly 12% during the week.
Perceived riskier assets such as oil and equities, which were also pummeled last week, could get a boost if a high-stakes meeting between U.S. President Donald Trump and Chinese President Xi Jinping at the Group of 20 gathering in Argentina later this week yields a long-awaited trade breakthrough.
“Next to [the] Xi-Trump G-20 meeting, today’s gossip is swirling about Saudi and Russian oil ministers said to be planning a trip to Buenos Aires, which is raising some hopes that some form of rebalancing agreement will come to fruition,” said Stephen Innes, head of Asia Pacific trading at Oanda, in a note to clients.
The oil market is waiting for a meeting of members of the Organization of the Petroleum Exporting Countries scheduled for Dec. 6, which is being overshadowed by concerns of a looming global oil glut. The cartel may be considering a solution to rebalance supply, but keep prices from leaping higher, by retaining output targets that were set back in 2016, The Wall Street Journal reported, citing sources.
Among other contracts, December natural gas NGZ18, -3.62% continued to slide on Monday, dropping 14.6 cents, or 3.4% to $4.162 per million British thermal units, after squeaking by with a 0.8% gain last week despite a more than 3% decline Friday.
December gasoline RBZ8, +4.06% rose 4% to $1.447 a gallon, after an 11.8% retreat last week, the largest percentage drop since February of 2016. The contract fell nearly 8% on Friday, its sharpest slide on a percentage basis since Feb. 2, 2009.
December heating oil HOZ8, +1.65% rose 1.7% to $1.908 after slumping 9.5% last week. The contract settled down 4.8% to $1.8762 a gallon on Friday, the lowest settlement for a front-month contract since March.