NEW YORK – Oil futures on Friday were on course for their biggest weekly percentage declines since January of just under 10 per cent as signs of tensions resurfaced between Saudi Arabia and Iran that could scupper a key supply cut pact.
Traders also noted a surge in U.S. crude inventories last week and muted demand continued to weigh on futures.
At a meeting of OPEC experts last week, Riyadh threatened to raise oil output steeply to bring prices down if Tehran refused to limit its production, a source from the Organization of the Petroleum Exporting Countries (OPEC) told Reuters.
A Gulf OPEC source, however, said Saudi Arabia “did not threaten” anyone with production increases at an OPEC experts meeting last week, but the source warned that production around the world will rise if there is no output limiting deal.
READ MORE: Oil hits 1-month low on concerns OPEC won’t go ahead with planned production cut
The meeting was intended to work out the details of cuts ahead of the next OPEC meeting on Nov. 30 following a decision to reduce output in Algiers to 32.50-33.0 million barrels per day in order to boost prices.
“We remain consistent in our long standing view that OPEC will be unable to patch together a deal capable of placing even a minor dent in global oversupply,” Jim Ritterbusch, president of Chicago-based energy advisory Ritterbusch & Associates, said in a note.
Brent futures fell 73 cents to $45.62US a barrel, a 1.6 per cent loss, by 11:49 a.m. EDT. U.S. crude fell 60 cents to $44.06 per barrel, a 1.3 per cent loss.
Both benchmarks were on track to fall for a sixth day in a row, the longest such streak for U.S. since July and the longest streak for Brent since June.
READ MORE: OPEC meets non-OPEC nations for oil talks, Russia still on board
For the week, U.S. crude was on track to fall about 9 per cent and Brent down about 8 per cent, which would be the biggest weekly losses for both since January.
Both contracts were down by as much as 16 per cent from their early October highs earlier Friday morning with U.S. at its lowest since September and Brent at its lowest since August.
Analysts said markets were also weighed down by traders pulling out money from futures ahead of the U.S. presidential election on Tuesday, which is seen as a risk to markets.
Beyond election concerns, traders said fundamentals were weak, with U.S. crude stocks surging, demand growth low, and doubts that OPEC and Russia can agree on a meaningful output cut this month.
U.S. crude oil exports rose to a record high in September, according to data from the U.S. Census Bureau on Friday.
In addition, Colonial Pipeline carrying gasoline, which was disrupted this week by an explosion, delayed its restart by a day to Sunday.
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