Oil drops on doubts over producer deal

AP FILE PHOTO

NEW YORK, United States—Oil prices retreated again Monday as doubts mounted over a potential agreement by major producers to limit output in order to strengthen prices.

US benchmark West Texas Intermediate for May delivery fell $1.09 to $35.70 a barrel on the New York Mercantile Exchange.

Brent North Sea oil for June delivery lost 98 cents at $37.69 a barrel in London.

Hopes for a April 17 producers summit in Doha to agree to cap output at January 2016 levels had helped lift oil prices back above $40 a barrel in early March.

However, confidence in a deal has been waning and took another hit Friday, when Saudi Arabia’s deputy crown prince, Mohammed bin Salman, told Bloomberg that Saudi Arabia would only cap output if the move was matched by Iran and other major producers.

Iran’s oil minister, Bijan Zanganeh, said on Sunday that Iran’s oil exports surpassed two million barrels per day following the lifting of international sanctions.

Russia, too, has been pumping aggressively, reaching 10.91 million barrels per day in March. That is the highest level in some 30 years and slightly more than January.

“Russia also does not appear to see any obligation to stick to the agreed production caps,” Commerzbank said.

“We’ve reset the expectations from being fairly optimistic that there’s going to be some sort of freeze agreement on April 17,” said Bart Melek, head of commodity strategy at TD Securities.

“Now it seems quite apparent that with the Saudis being quite adamant that they will not participate alone, without Iran showing similar good will, that these expectations are unwinding and with it, much of the rally.”

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