08 February 2016, London — Crude oil prices fell on Monday because of lingering concerns over a supply overhang and after a Saudi-Venezuela meeting showed few signs that steps would be taken to boost prices.
Global benchmark Brent futures LCOc1 were down 68 cents at $33.38 at 7.12 a.m. ET, while U.S. crude futures CLc1 lost 81 cents to $30.08.
“There’s still a lot of concerns about the state of the crude oil stocks in the United States,” said Olivier Jakob, oil analyst at Petromatrix.
Weekly U.S. crude and gasoline inventories hit record highs, data from the Energy Information Administration (EIA) showed last week.
Morgan Stanley warned on Monday that a global supply overhang was unlikely to start clearing before 2017.
“We see limited upside for Brent (and range-bound) pricing over the next 12 months as the supply overhang is worked off,” the bank said.
No tangible signs emerged from a meeting on Sunday between Saudi Arabia’s oil minister Ali al-Naimi and his Venezuelan counterpart that OPEC and non-OPEC suppliers were ready to meet to discuss the price slump.
“It was a successful meeting and (conducted) in a positive atmosphere,” Saudi news agency SPA cited Naimi as saying.
Venezuela’s Oil Minister Eulogio Del Pino, who is on a tour of oil producers to lobby for action to prop up prices, said his meeting with Naimi was “productive”.
“The chances of a deal are slim now but will increase if prices stay around $30 a barrel, which they will if Iran and Iraq come through on their intended volumes,” PVM Oil Associates analyst David Hufton said in a note on Monday.
In a sign Tehran is determined to claw back lost market share after the lifting of sanctions, Iranian Oil Minister Bijan Zanganeh was quoted by the ministry’s news agency SHANA on Saturday as saying that France’s Total (TOTF.PA) had agreed to buy 160,000 barrels per day (bpd) of Iranian crude for delivery in Europe.
Zanganeh added that Italy’s Eni (ENI.MI) was interested in buying 100,000 bpd and Italian refiner Saras (SRS.MI) was interested in buying 60,000-70,000 bpd.
Iran is also considering taking stakes in refineries in six countries to guarantee sales of its crude, SHANA quoted managing director of the National Iranian Oil Engineering and Construction Company Hamid Sharif Razi as saying on Monday.
The market is eyeing U.S. Federal Reserve Chair Janet Yellen’s testimony to lawmakers on Wednesday along with U.S. crude inventory data from the EIA on the same day.
The International Energy Agency and OPEC are also due to release their monthly reports on Tuesday and Wednesday, respectively.
*Ahmad Ghaddar Aaron Sheldrick; Editing – Keith Weir – Reuters