Oil halts rally above $50 as Iraq signals break from OPEC cuts

Hong Kong - Oil halted its advance near $50 a barrel as Iraq threatened to derail OPEC’s plan to stabilise crude markets by saying it should be exempt from planned output cuts.

Prices slid as much as 0.9% in New York after rising 0.4% on Friday. Iraq should be exempted from trimming production because it’s embroiled in a war with Islamic militants, Oil Minister Jabbar Al-Luaibi said on Sunday at a news conference in Baghdad.  

Rigs targeting crude in the US rose for an eighth week to the highest level since February, according to Baker Hughes.

Oil has fluctuated near $50 a barrel amid uncertainty about whether the Organisation of Petroleum Exporting Countries (OPEC) can implement an accord to reduce oil output when they gather at an official meeting in November.

A committee will meet later this month to try to resolve differences over how much individual members should pump.

"The mindset of the market at this stage is to wait for the actual outcome of the November meeting," said Ric Spooner, a chief market analyst at CMC Markets in Sydney.

"Oil will probably hold around $50 a barrel, but the short-term risk looks to the downside.

Implementation of the output deal will probably be left to Saudi Arabia and a couple of others."

West Texas Intermediate for December delivery lost as much as 44 cents to $50.41 a barrel on the New York Mercantile Exchange, and was at $50.61 at 2:09 in Hong Kong. Front-month futures gained 1% last week to close at $50.85 on Friday. Total volume traded was about 34% below the 100-day average.

Iraqi output

Brent for December settlement slid as much as 41 cents, to $51.37 a barrel on the London-based ICE Futures Europe exchange. Prices gained 40 cents, to $51.78 on Friday. The global benchmark crude traded at a premium of 98 cents to WTI.

Iraq disputes OPEC figures that peg the nation’s output at less than 4.2 million barrels daily, Al-Luaibi said. The country currently produces more than the 4.7 million barrels a day it pumped in September, he said.

Iran, Nigeria and Libya are the only nations currently exempt from the proposed production cuts.

Oil-market news:

Iran is hoping Russia will cooperate with OPEC on measures to help balance the market, Iranian Oil Minister Bijan Namdar Zanganeh said in Tehran.

Russia is still in talks with OPEC about oil production, and "many scenarios" are being discussed, Russia’s Energy Minister Alexander Novak told reporters after meeting with energy ministers in Riyadh.