While the Energy Information Admintation reports another drop in crude stocks, doubts about a OPEC/non-OPEC accord was met with skepticism. Traders assumed this would be the end of the OPEC/non-OPEC deal; but not so fast.
Crude prices jumped in reaction to the latest weekly U.S. crude stockpiles data but then quickly went into reverse gear, before bounce back once again. Traders were in no mood to take any chances ahead of the conclusion of talks between the OPEC and non-OPEC members in Algeria, especially given how headline-driven prices have become. At the time of this writing, Brent was trading at $46.65 and WTI at $45.20 a barrel, both holding onto small gains for the day.
Saudi Arabia offering to cut production in a sign of good faith after they lowered expectations for a deal in Algiers this week. Saudi Arabia says they are ready for any outcome and there is talk that if OPEC can come to an agreement, they could still formalize this meeting. OPEC negotiations are heating up as the cartel members look to solidify a deal to restrain oil output.
Saudi Arabia has offered to reduce oil production if rival Iran agrees to cap its own output this year, in a major compromise ahead of talks in Algeria next week, four sources familiar with the discussions told Reuters.
Crude oil prices pop on reports of Saudi Arabia announcing what Russian oil minister Alexander Novak calls a "historic” agreement. The world’s two largest oil producers have a deal to do something, but we are not quite sure what that is.
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Crude oil prices got hammered as record long hedge funds wanted to book profits on the last day of the month. Hedge funds wanted to take profits, because despite the big price drop yesterday, the month of August gave oil its first up month after two down months. Oil did see the pressure increase after a headline increase in crude supply on the weekly inventory and a drawdown in Cushing, Okla.
They said it could not be done, but OPEC and non-OPEC may go ahead and do it anyway. It is looking more likely to the crude oil trade that a deal to freeze oil production could get done. Last week it was Saudi Arabian energy minister Khalid al-Falih who signaled he was open to an agreement.