Oil pared a second weekly advance amid a persistent global glut while Venezuela and Russia agreed to a plan to address the slide in prices.
Futures fell as much as 1.3 percent and were 2.2 percent higher for the week in New York. OPEC member Venezuela and Russia, the largest oil exporter outside the group, reached an agreement on “initiatives” to bring stability to the market, Venezuelan President Nicolas Maduro said, according to the nation’s state- run news agency AVN. The world’s crude surplus will last longer than predicted, Societe Generale SA reported this week.
Oil has fluctuated after capping the biggest three-day rally in 25 years on Monday. Crude is still down more than 20 percent from this year’s closing peak in June as leading members of the Organization of Petroleum Exporting Countries sustain output and U.S. crude stockpiles remain almost 100 million barrels above the five-year seasonal average.
“There is a very large surplus in the oil market, which in the absence of any major supply side shocks, is likely to take some time to wind down,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “The market is likely to take an evidence-based approach to the Venezuelan agreement.”
West Texas Intermediate for October delivery fell as much as 61 cents to $46.14 a barrel on the New York Mercantile Exchange and was at $46.19 at 1:01 p.m. in Singapore. The volume of all futures traded was about 7 percent below the 100-day average. The contract gained 50 cents, or 1.1 percent, to $46.75 on Thursday.
Brent for October settlement slipped 52 cents to $50.16 a barrel on the London-based ICE Futures Europe exchange. It advanced 18 cents to $50.68 on Thursday. The European benchmark crude traded at a premium of $3.96 to WTI.
Russian President Vladimir Putin and his Venezuelan counterpart “have agreed on some initiatives that will be known when put in place, to achieve stability of the oil market,” Maduro said Thursday after a meeting in China. “Stable prices may be best for the world economy and, at present, prices at least above $70 a barrel are the best for ensuring energy investment in the next 50 years,” he said.
Crude stockpiles in the U.S., the world’s biggest oil consumer, expanded by 4.67 million barrels to 455.4 million through Aug. 28, according to an Energy Information Administration report on Wednesday. Output declined for a fourth week to 9.22 million barrels a day, the EIA said.
Prices will be lower for longer amid high OPEC output led by Saudi Arabia and Iraq, and the gradual return of Iranian supply next year, Michael Wittner, the New York-based head of oil market research at Societe Generale, said in a report.
Nineteen of 44 analysts and traders, or 43 percent, were bearish on WTI in a Bloomberg survey through Thursday. Thirteen respondents were neutral while 12 were bullish.