Oil prices slip on Saudi comments

A gas station attendant pumps fuel into a customer's car at PetroChina's petrol station in Beijing, China, March 21, 2016. PetroChina, China's biggest oil and gas producer, reported a 70 percent slumpin its full-year 2015 profit, with earnings upstream and in the marketing segment both taking a hit from lower prices. Picture taken March 21, 2016. REUTERS/Kim Kyung-Hoon

LONDON: World oil prices dipped Monday as Saudi Arabia cast doubt on whether a key producers meeting would reach an agreement to freeze output to address a global supply glut.

At about 1600 GMT, US benchmark West Texas Intermediate (WTI) for delivery in May was down 23 cents at US$36.56 (RM142.75) a barrel.

Brent North Sea crude for June delivery shed 41 cents to US$38.26 a barrel compared with Monday’s close.

Hopes for a deal at the April 17 gathering in Doha led by Russia and Saudi Arabia had been a major driver of a rally in prices from near 13-year lows in February.

But the latest comments by Saudi Arabia’s deputy crown prince, Mohammed bin Salman, signalling a reluctance to freeze output unless others did the same knocked down already low expectations of an accord.

“If all countries agree to freeze production, we’re ready,” he said in an interview with Bloomberg News.

Michael McCarthy, an analyst with CMC Markets in Sydney, told AFP the price slump came as “no surprise” as traders reacted to Salman’s comments.

“Part of the recent strong rally has been related to some optimism in the agreement and that’s now looking less likely following those comments from the Saudis,” he said by telephone.

“The markets are looking for a curtailment of supply somewhere. They are looking to groups like Opec. The potential for Opec to reign in any production is very slight, particularly given the Iranians coming back,” he added, referring to the Organisation of the Petroleum Exporting Countries producers’ group.

Iran has been ramping up production after nuclear-linked Western economic sanctions were lifted in January, adding to the saturated market. Iranian officials have made clear they plan to ramp up production to pre-sanctions levels.

“There were renewed concerns over continuing oversupply due to comments from Saudi Arabia that it will agree to freeze production only if Iran and other major producers agree to do the same,” said EY oil analyst Sanjeev Gupta.

“Crude oil prices also came under pressure from reports that crude oil production from Iran increased by 250,000 (barrels per day) in March since the lifting of sanctions.” - AFP