prices slide, supply overhang in focus
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[February 08, 2016]
By Ahmad Ghaddar
LONDON (Reuters) - Crude oil prices fell on
Monday because of lingering concerns over a supply overhang and after a
Saudi-Venezuela meeting showed few signs that steps would be taken to
Global benchmark Brent futures were down 68 cents at $33.38 at
7.12 a.m. ET, while U.S. crude futures lost 81 cents to
"There’s still a lot of concerns about the state of the crude oil
stocks in the United States," said Olivier Jakob, oil analyst at
Weekly U.S. crude and gasoline inventories hit record highs, data
from the Energy Information Administration (EIA) showed last week.
Morgan Stanley warned on Monday that a global supply overhang was
unlikely to start clearing before 2017.
"We see limited upside for Brent (and range-bound) pricing over the
next 12 months as the supply overhang is worked off," the bank said.
No tangible signs emerged from a meeting on Sunday between Saudi
Arabia's oil minister Ali al-Naimi and his Venezuelan counterpart
that OPEC and non-OPEC suppliers were ready to meet to discuss the
"It was a successful meeting and (conducted) in a positive
atmosphere," Saudi news agency SPA cited Naimi as saying.
Venezuela's Oil Minister Eulogio Del Pino, who is on a tour of oil
producers to lobby for action to prop up prices, said his meeting
with Naimi was "productive".
"The chances of a deal are slim now but will increase if prices stay
around $30 a barrel, which they will if Iran and Iraq come through
on their intended volumes," PVM Oil Associates analyst David Hufton
said in a note on Monday.
In a sign Tehran is determined to claw back lost market share after
the lifting of sanctions, Iranian Oil Minister Bijan Zanganeh was
quoted by the ministry's news agency SHANA on Saturday as saying
that France's Total had agreed to buy 160,000 barrels per day (bpd)
of Iranian crude for delivery in Europe.
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Zanganeh added that Italy's Eni was interested in buying
100,000 bpd and Italian refiner Saras was interested in buying
Iran is also considering taking stakes in refineries in six
countries to guarantee sales of its crude, SHANA quoted managing
director of the National Iranian Oil Engineering and Construction
Company Hamid Sharif Razi as saying on Monday.
The market is eyeing U.S. Federal Reserve Chair Janet Yellen's
testimony to lawmakers on Wednesday along with U.S. crude inventory
data from the EIA on the same day.
The International Energy Agency and OPEC are also due to release
their monthly reports on Tuesday and Wednesday, respectively.
(Additional reporting by Aaron Sheldrick; Editing by Keith Weir)
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