4/18/2016, 8:59 AM (Source: TeleTrader)
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Oil prices sink 5% after Doha meeting

Following the summit of oil producing countries in Doha, Qatar, which ended without any agreement on possible freeze of production, the markets reacted with disappointment. Prices of the benchmark crudes saw a fall over 5% in the early trade on Monday.

The international benchmark Brent for June delivery traded 4.97% lower at $41.06 a barrel. The U.S. light sweet crude West Texas Intermediate for May delivery fell 4.91% to $38.47 a barrel, both on ICE Europe futures exchange by 8:55 a.m. CET.

The price of OPEC basket of 13 crudes was last reported for Thursday trade at $38.58 a barrel, which compares to $38.91 a barrel on Wednesday.

Not even the news of workers' strike in the Kuwait Oil Company, which cut the output from 3 Mb/d to just 1.1 Mb/d, could help keep the oil prices remain at least at previous levels.

The Oil Producing Countries Ministerial Meeting managed to gather representatives of 20 countries, but failed in every other respect. Saudi Arabia and Iran have translated their political dispute – and proxy wars fought in Yemen, Iraq and Syria – into oil markets, jeopardising influence of the Organization of the Petroleum Exporting Countries (OPEC).

Iran has refused to join freeze in production saying it has just returned to the markets after five years of sanctions, and aims to increase daily production from current 3.3 million barrels per day (Mb/d) to at least 4 Mb/d.

Saudi Arabia also refused to freeze its production at January levels, demanding that all OPEC members do the same, possibly relying on previous experience, when output cuts were had been agreed but not fully respected by other OPEC members.

The next earliest opportunity for a meaningful agreement will be in June, during the annual OPEC summit in Vienna.

The prices of oil have seen recovery of around 50% since mid-February, after selling at $27.88 a barrel for Brent and $26.21 a barrel for WTI. Now, the prices movements seem bound to domain of "anyone's guess" and the energy oil companies' stocks looking less and less attractive.

Latest prices of around $45 a barrel could become an upper limit, with the possible lows at around $35 a barrel in just days.

Breaking the News / ZR