Oil declined for a second day as Venezuela proposed an OPEC summit to stabilize prices amid a global glut.
Futures slid as much as 2 percent in New York. Producers from outside of the Organization of Petroleum Exporting Countries including Russia will be invited to the meeting, Venezuelan President Nicolas Maduro told state-owned broadcaster Telesur. Cutting output for a short-term price gain isn’t the cure for the “sickness” affecting global markets, Russian Energy Minister Alexander Novak said Friday.
Oil has fluctuated the past three weeks as concerns overs slowing demand in China fueled volatility in global markets. Prices are down more than 25 percent from this year’s closing peak in June on signs the surplus will persist. OPEC members are sustaining output and U.S. crude stockpiles remain almost 100 million barrels above the five-year seasonal average.
“There has been no change in the broader supply fundamentals,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “The volatility is going to stay but hopefully we’ve seen the bottom for oil.”
West Texas Intermediate for October delivery dropped as much as 90 cents to $45.15 a barrel on the New York Mercantile Exchange and was at $45.85 at 2:20 p.m. Sydney time. The contract slid 70 cents to $46.05 on Friday. The volume of all futures traded was about 12 percent below the 100-day average. Prices have decreased 14 percent this year.
All electronic transactions Monday will be booked with Tuesday’s for settlement purposes because of the Labor Day holiday.
China Confidence
Brent for October settlement lost as much as 83 cents, or 1.7 percent, to $48.78 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $3.51 to WTI.
Oil prices below $50 a barrel doesn’t sustain investment, according to Maduro. The Venezuelan president and his Russian counterpart Vladimir Putin agreed on “initiatives” to bring stability to the market, Venezuela’s state-run news agency AVN said last week.
Senior Chinese officials have telegraphed confidence in their economy’s underlying solidity. The rout in equities is close to ending and state intervention prevented systemic risk and stopped a free fall, according to a statement from Zhou Xiaochuan, the People’s Bank of China Governor.
Hedge funds reduced short positions in WTI by 13 percent in the week ended Sept. 1 after the largest three-day rally in 25 years. It was the biggest liquidation of bearish bets since May, according to U.S. Commodity Futures Trading Commission data.
Drill rigs targeting oil in the U.S. dropped by 13 to 662, Baker Hughes Inc. said on its website Friday. That’s the first decline in active machines since the week ended July 17.