Oil drops as glut, profit-taking beat back optimism over OPEC meet

Crude prices inched lower Tuesday on continued worries over a global oil glut and as investors took profits on gains of nearly 3 percent from the previous session, beating down upwards momentum from a possible meeting of oil producers.

Venezuelan Oil Minister Eulogio del Pino said on Monday that a meeting between OPEC and non-OPEC countries may take place “in the coming weeks” as the crisis-stricken South American nation sought support to prop up weak oil markets.

Some OPEC officials have said a global oil output freeze could be discussed at an already scheduled September meeting of the organization, but non-OPEC Russia, the world’s largest oil producer, said it does not see any grounds for holding production at current levels.

Since the plunge in oil prices that began in mid-2014, Venezuela has repeatedly tried to broker deals to freeze production and reduce a supply glut, with limited success.

“Crude prices have been rising, so there may be no deal at OPEC,” Kaname Gokon at brokerage Okato Shoji in Tokyo. “Russia seems to be keeping a distance from OPEC.”

London Brent crude for October delivery was down 40 cents at $44.99 a barrel by 0420 GMT, after settling up $1.12, or 2.5 percent, on Monday. After falling nearly 15 percent in July, Brent prices so far this month are up about 6 percent.

NYMEX crude for September delivery was down 36 cents at $42.66 a barrel, after closing up $1.22, or 2.9 percent, on Monday. The U.S. benchmark lost about 14 percent last month and is up 2.5 percent in August.

Qatar’s Energy Minister and OPEC President Mohammad bin Saleh al-Sada said on Monday the oil market is on the path to rebalancing despite the recent decline in global oil prices, adding that OPEC was in continuous talks to stabilise the market.

Market intelligence firm Genscape reported a build of more than 307,000 barrels at the Cushing, Oklahoma delivery hub for WTI futures in the week to Aug. 5, traders said, even as analysts forecast in a Reuters poll a total U.S. crude inventory drop of 1 million barrels.

Industry group the American Petroleum Institute is due to release its weekly oil data at 4:30 p.m. EDT (2030 GMT) later on Tuesday.

Source: Reuters