Summary Stock market observes loss as oil prices fall
LONDON, March 10, 2016 (AFP) - World oil prices fell Thursday, reversing the previous day s sharp rally as traders eyed gloomy losses on stock markets and uncertainty over a producers meeting.
Around 1715 GMT, US benchmark West Texas Intermediate (WTI) for delivery in April slid 70 cents at $37.59 a barrel. Brent North Sea crude for May delivery lost $1.06 to $40.01 a barrel compared with Wednesday s close. Traders remain on edge over the long-running supply glut that has plagued the oil market in recent years.
Added to the picture, there is mounting uncertainty regarding a potential meeting of OPEC and non-OPEC countries to freeze output levels. Producer nations had previously been expected to gather at some stage in March to agree a production freeze.
Analysts said that key OPEC member Iran was unwilling to lose market share, following the resumption of its crude exports after West lifted sanctions in January. "It appears Iran s unwillingness to even consider an output freeze has derailed the meeting and could even scupper the freeze itself," said Jasper Lawler at CMC Markets.
In a bid to stabilize an oversupplied market, Russia and OPEC members Saudi Arabia, Venezuela and Qatar on February 16 agreed a preliminary deal to freeze output at January levels -- provided that other major producers did the same. The mood also soured Thursday in line with sliding stock markets in the eurozone.
Frankfurt and Paris equities failed to sustain a rally prompted by the ECB slashing interest rates, as investors focus quickly shifted to the European Central Bank s gloomy economic forecasts instead. In contrast, the oil market had rallied Wednesday as falling US gasoline inventories boosted the demand outlook in a global market awash in crude supplies.
Both main contracts soared, with WTI hitting a more than three-month high and Brent breaking $41 after a US energy department report. The figures showed gasoline inventories plunged three times faster than expected, while the country s commercial crude stockpiles rose almost two-thirds less than forecast. "The initial gut reaction of the market to the release of the weekly statistics on US oil inventories was a buying frenzy that lasted until the close," said PVM analyst Tamas Varga.
Analysts said it remains to be seen whether the price rise can be sustained, especially after China this week reported a plunge in exports in February, stirring renewed fears of a "hard landing" for the world s second biggest economy.
"I m still not leaning towards prices moving up sustainably because the fundamentals have not changed," said Phillip Futures analyst Daniel Ang.
He pointed to US crude production, which he said rose marginally last week after weeks of decline, describing it as "rather bearish" for prices.
