Oil falls as talk of Libya, Nigeria caps can't dispel Opec doubt

London - Oil fell from the lowest closing price in two weeks as talk of Libya and Nigeria being requested to cap their production failed to dispel doubts about the effectiveness of the Organisation of Petroleum Exporting Countries (Opec)’s cut.

Futures were down 0.8% in New York, extending last week’s 3.9% drop. The two African producers, who were exempt from supply cuts because of internal strife but are now recovering, have been invited to a July 24 meeting in Russia to discuss whether their production has stabilized, Kuwait’s Oil Minister Issam Almarzooq said in Istanbul.

BNP Paribas sharply reduced its price forecasts for this year and next because supply growth elsewhere is diluting the impact of the Opec-led curbs.

Oil in New York and London remains in a bear market amid concerns elevated global oil inventories and rising supply will offset curbs by the Organisation of Petroleum Exporting Countries and its partners including Russia.

Libya and Nigeria together added 440 000 barrels a day of production in May and June as fields restarted, according to data compiled by Bloomberg.

It’s premature to talk about deepening output cuts, Opec Secretary-General Mohammad Barkindo said in Istanbul.

"Sentiment in the oil market is still negative," Giovanni Staunovo, an analyst at UBS Group said. "In order to change that, a series of large inventory draw downs in the US is probably needed."

West Texas Intermediate for August delivery was down 32 cents at $43.91 a barrel as of 8:54 New York time. Total volume traded was about 14% above the 100-day average. Prices fell $1.29 to $44.23 on Friday.

Brent for September settlement fell 30 cents to $46.41 a barrel on the London-based ICE Futures Europe exchange. Prices slid 2.5% last week. The global benchmark crude traded at a premium of $2.32 to September WTI.

Deepening production cuts is not on the agenda for the July 24 meeting in St. Petersburg, said Kuwait’s Almarzooq, who is chairman of the committee monitoring compliance with the curbs. If Libya and Nigeria are able to stabilize their output at current levels, they will be asked to cap supply as soon as possible, he said.

"Opec’s objective to reduce oil inventories to their five-year average is elusive in the short-term," BNP Paribas’s head of commodity markets strategy Harry Tchilinguirian said in an emailed report.

The bank cut its 2017 Brent forecast by $9 to $51 and 2018 by $15 to $48, while making similar reductions for WTI.

Oil-market news:

US shale production can expand with oil prices around the mid-$40s, JPMorgan Chase said in a note. Saudi Aramco will invest $300 billion in oil production over the next decade. Energy demand will keep growing over the next 20 years, said Russian Energy Minister Alexander Novak.

The tussle for supremacy between Opec and US shale drillers is killing off older oil fields at the fastest pace in almost a quarter century, according to consultant Rystad Energy.