LONDON – Oil futures edged down yesterday to below $40 per barrel, with the market growing increasingly skeptical that a looming deal to freeze crude production can help clear a global glut.
Brent crude for June delivery LCOc1 fell 64 cents to $39.69 a barrel. Brent rose 6 percent in the first quarter of this year, its first such increase since a 15 per cent rally in the second quarter of 2015.
US crude CLc1 fell 64 cents to $37.70 a barrel.
Prices rose almost 4 per cent over January-March, also the first quarterly gain since surging nearly 25 per cent in the second quarter of last year. Prices have recently pulled back on low trading volumes and concerns about oversupply ahead of an oil producers’ meeting in Doha to agree a possible output freeze on April 17.
“Hopes have been running high about the potential bullish impact of the planned Organisation of the Petroleum Exporting Countries (OPEC) /non-OPEC production freeze but it is hard to see how sticking to the January output level would be supportive for oil prices. There will be no re-balancing this year,” PVM Oil Associates analyst Tamas Varga said.
A Reuters monthly survey showed this week that OPEC output rose in March on higher supply from Iran after the lifting of sanctions and near-record exports from southern Iraq.
Saudi Arabia will freeze its oil output only if Iran and other major producers do so, Saudi Deputy Crown Prince Mohammed bin Salman told Bloomberg in an interview.
Oil prices fell despite a lower dollar and China’s official Purchasing Managers’ Index (PMI) showing an unexpected expansion in March, the first in nine months.
Putting a floor under prices was a drop in US crude output, falling for a fourth straight month in January to the lowest since October 2014.