Oil fell around 3% on Monday after Iran dashed hopes of a coordinated production freeze any time soon, returning bearish sentiment over a supply glut that has sent prices crashing.
Global benchmark Brent crude futures fell back below $40 a barrel, trading at $39.27 at 1308 GMT, down $1.12 on Friday's close. Brent hit a 12-year low of $27.10 in January.
US crude was down $1.09 at $37.41 a barrel.
"Oil is down because Iran said they would only join the output freeze group once they reached production of 4mn barrels a day," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.
He was referring to comments by Iran's oil minister Bijan Zanganeh on Sunday that the Opec member would join discussions after its output reached that level.
Iran's oil exports are due to reach 2mn bpd in the Iranian month that ends on March 19, up from 1.75mn in the previous month, he said.
Zanganeh met Russian counterpart Alexander Novak in Tehran on Monday but talks focused on long-running discussions about an oil and gas swap mechanism.
According to the Shana news agency, Zanganeh said Iran and Russia could cooperate on the swap, which would see Russia send oil and gas to northern Iran in return for Iranian supply to Russian customers in the Gulf.
Saudi Arabia appeared to have stuck to a preliminary deal with some other producers to freeze output, as its crude production held steady in February at 10.22mn barrels per day (bpd), an industry source told Reuters.
Opec members and non-Opec producers are likely to meet again in mid-April in Doha to discuss freezing output, Opec sources told Reuters.
A March 20 meeting in Russia, which was part of an earlier plan, now looks unlikely.
Worries about demand fundamentals moved back into the spotlight as investment bank Morgan Stanley warned that a slowing global economy and high production would prevent any sharp rises in oil prices.
"Oil prices now seem to have bottomed, even though they are likely to stay subdued for the rest of this year before starting to move higher in 2017," the US bank said in a research note. It added that cheap oil had not provided the boost to growth that many had hoped for.
In a sign that investors are growing more sceptical about a rebound in oil prices, ICE data showed on Monday that speculators had cut net long positions in Brent crude by 9,500 contracts in the week to March 8.
Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo, said a roughly 2mn bpd oil surplus would weigh down oil prices in the short term. The imminent restart of a pipeline between Iraq and Turkey and the breakdown in talks about a production freeze would add further downside, he said.
"We are likely to see $35 a barrel before we see $45 a barrel."
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
Qatar is committed to the shift towards knowledge-based economy: Al-Kuwari
CI affirms Qatar ratings; outlook remains stable
New regulations bring ‘significant changes’ to Qatar’s Income Tax Law
Premier Inn Doha Airport Hotel opens
QIB is Gold Sponsor for Compliance and Combating Financial Crime Conference
Cutting back on sending e-mails could help fight global warming
Thai economy faces turbulence from China curb on tours
Bayer is said to discuss $10bn settlement of weed killer claims
Boeing’s long-haul 777X airliner makes first flight