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Hong Kong - Oil is poised for the biggest monthly advance since April as the global surplus diminishes and OPEC’s planned talks fan speculation it could reach an accord on output.
Futures slid 0.5% in New York, trimming the monthly gain to 11%. Iraq’s Prime Minister Haidar Al-Abadi said on Tuesday the country would support a proposal among major producers to freeze output.
Prices on Wednesday were capped by a report that US crude stockpiles increased by 942 000 barrels last week, according to the industry-funded American Petroleum Institute.
Oil entered a bull market August 18, less than three weeks after tumbling into a bear market. A limit on production would be positive for the market, Saudi Arabia’s Energy Minister Khalid Al-Falih said in an interview last week, while ruling out an actual cut to output.
A freeze deal between members of the Organisation of Petroleum Exporting Countries (OPEC) and other producers was proposed in February but a meeting in April ended with no final accord.
"The market is rebalancing," Michael Cohen and Miswin Mahesh, analysts at Barclays Plc, wrote in a report. "A constructive oil-market balance is emerging for the fourth quarter and 2017."
West Texas Intermediate for October delivery was at $46.14 a barrel on the New York Mercantile Exchange, down 21 cents, at 9:32 a.m. London time.
The contract declined 63 cents to settle at $46.35 on Tuesday. Total volume traded on Wednesday was about 38% below the 100-day average.
Iraq stance
Brent for October settlement, which expires on Wednesday, was down 35 cents at $48.02 a barrel on the London-based ICE Futures Europe exchange, trading at a $1.88 premium to WTI. The global benchmark crude dropped 1.8% on Tuesday. The more-active November contract fell 35 cents to $48.38 a barrel.
Oil is still trading at half its level two years ago. The prolonged decline is hurting Iraq, Al-Abadi said in Baghdad, pledging to support a potential output freeze deal.
The nation is the second-biggest member of OPEC, pumping 4.36 million barrels a day in July, according to data compiled by Bloomberg. Saudi Arabia is the largest, producing 10.43 million a day.
Oil-market news:
The US government is due to release its crude-stockpile report later on Wednesday. The data may show a 1.3 million-barrel increase, according to a Bloomberg survey. Gasoline inventories probably fell by 1 million barrels last week, the survey showed.
Schlumberger is expecting the drilling market to get worse in the third quarter thanks to a further deterioration in deep water work around the world.
Japan’s JX Holdings and TonenGeneral Sekiyu KK finalized an agreement to form the county’s biggest oil refiner, starting in April.
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