Brent drops as Saudi-Russia stop short of freeze

Bloomberg

Brent oil dropped after a pledge
by Russia and Saudi Arabia to cooperate to stabilize the market failed
to include any specific measures to bolster prices.
Futures fell as much as 0.8 percent in London after climbing 4.8 percent over the previous two sessions. Brent jumped as much as 5.5 percent on Monday as news broke that Saudi Arabia and Russia would make a “ significant” statement about the oil market. Prices pared gains as the two nations stopped short of revealing any concrete steps to limit output.
“For a couple of hours, the market was getting its hopes up, that they would announce a strategy that would impact the physical market, but they were not close to meeting those expectations,” said Jens Naervig Pedersen, an analyst at Danske Bank A/S. “They under-delivered in the sense that it was quite vague in terms of targets for output.”
Brent rose the most in three weeks on Friday after President Vladimir Putin said he’d like OPEC and Russia to agree to a production freeze, speaking before he traveled to China to meet Saudi Deputy Crown Prince Mohammed bin Salman. Oil had rallied in August on speculation that members of the Organization of Petroleum Exporting Countries and other producers would agree to cap output when they meet in Algiers later this month. A similar proposal was derailed in April over Saudi Arabia’s insistence that Iran participate.

Brent Slips
Brent for November settlement fell as much as 37 cents and was down 36 cents at $47.27 a barrel on the London-based ICE Futures Europe exchange at 9:48 a.m. local time. The contract closed at $47.63 on Monday, up 1.7 percent.
West Texas Intermediate for October delivery was at $44.88 a barrel on the New York Mercantile Exchange, up 44 cents from Friday’s close. Because of the U.S. Labor Day holiday, electronic transactions from Monday will be booked with Tuesday’s for settlement purposes. WTI for November was trading at a $1.81 discount to Brent for the same month.
Saudi Energy Minister Khalid Al-Falih said Monday there’s no need to freeze output now, though he’s optimistic the Algiers meeting this month will lead to an agreement among producers. His Russian counterpart, Alexander Novak, said the two nations were seeking ways to ease oil-market volatility. Both were attending the G-20 summit in China.
Venezuela supports Russia-Saudi efforts to stabilize prices, according to the country’s oil minister, Eulogio Del Pino. Several other OPEC countries also welcomed the joint pledge to
cooperate, including the United
Arab Emirates, Kuwait and Qatar. The Houston ship channel closed after
an oil-tanker fire and spill. Iran remains the key hurdle to any OPEC action on output, according to a report from Citigroup Inc.