Oil slumps 2.8% amid reports Saudis do not expect output deal

Oil prices fell about 3 per cent on Friday, paring weekly gains, on a report that Saudi Arabia did not expect an agreement at talks next week among major crude exporters aimed at freezing production.

Crude futures slumped after Bloomberg reported that Saudi Arabia did not expect a decision at Algiers, the capital of Algeria, where the biggest oil producers are expected to convene next week for talks, traders said. Bloomberg cited a “delegate” as source, said traders who saw the report.

Brent crude oil was down $1.33, or 2.8 per cent, at $46.32. For the week, it was up 1.6 per cent.

US West Texas Intermediate (WTI) crude was down $1.40, or 2.9 per cent, at $44.92. On the week, WTI showed a gain of less than 5 per cent.

Earlier in the session, Brent and WTI were headed for their largest weekly gain in more than a month, reacting to a Reuters report that Saudi Arabia has offered to reduce production if rival Iran caps its own output this year. The Reuters report was based on sources who were familiar with discussions between the two sides.

Traders and investors were also awaiting a US oil rig count report to ascertain if more drillers were returning to the well pad in the world’s largest oil consumer. – (Reuters)