Oil fell after briefly rising above the key $50-a-barrel level in New York.
Futures declined 0.7 percent in New York after advancing for five straight sessions. OPEC and non-OPEC producers will convene in Abu Dhabi next week to discuss why some nations aren’t complying with production cuts. The U.S. is said to be considering increasing sanctions against Venezuela’s oil industry, the Wall Street Journal reported, citing people familiar with the deliberations.
“We ran into resistance up there. The market may have gotten ahead of itself, certainly given a lot of benefit of the doubt to this latest plan by Saudi Arabia, Kuwait and others to cut back on exports,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. The OPEC and non-OPEC meeting will “shine a bright light on the production issues.”
Oil climbed above its 200-day moving average last week for the first time since May as concerns began to ease that efforts by the Organization of Petroleum Exporting Countries and its allies to curb output were being undermined by rising production elsewhere. Kuwait joined the United Arab Emirates in promising to pump less crude after Saudi Arabia called on fellow OPEC producers to cut more supply.
West Texas Intermediate for September delivery slipped 35 cents to $49.36 a barrel at 10:07 a.m. on the New York Mercantile Exchange. Prices climbed $3.94 last week to close at $49.71 on Friday, the highest settlement since May 26. Total volume traded was about 37 percent above the 100-day average.
Sell Signal
The U.S. benchmark breaking through $50 a barrel could be interpreted as a bullish technical breakout, but with seasonal weakness ahead, now is a good time to sell, Paul Ciana, Bank of America Merrill Lynch chief technical strategist, said in a Bloomberg Television interview.
Brent for September settlement, which expires Monday, declined 25 cents to $52.27 a barrel on the London-based ICE Futures Europe exchange, after adding 9.3 percent last week. The global benchmark traded at a premium of $2.92 to WTI. The more-actively traded October contract dropped 21 cents to $52.01.
Representatives of some OPEC and non-OPEC nations will meet in the United Arab Emirates capital on Aug. 7-8 to discuss why some of them aren’t fully implementing their commitment to cut output, according to an OPEC statement.
See also: Maduro Waits for U.S. Response After Violent Venezuela Vote
Police in Venezuela clashed with demonstrators after a vote Sunday to elect members of a new legislative body that President Nicolas Maduro insisted is needed to restore order after months of protests. The U.S. buys about a third of Venezuela’s crude production and is the main buyer that pays in cash.
“Depending on how the Trump administration decides to proceed going forward, of course that could have implications,” including potentially blocking U.S. imports of Venezuelan crude, said Harry Tchilinguirian, a commodities analyst at BNP Paribas SA in London. “It’s very unclear at this stage what course the U.S. administration will follow.” - Source: Bloomberg -