Brent oil halts advance as Saudis, Russia fall short of freeze

[TOKYO] Brent oil halted a two-day advance as talks between Russia and Saudi Arabia over ways to stabilize the crude market fell short of an output freeze.

Futures in London slipped 0.3 per cent after gaining 4.8 per cent over the previous two sessions.

The contract rose as much as 5.5 per cent on Monday as news broke Saudi Arabia and Russia would make a "significant" joint-statement on the oil market at the G20 summit in China.

Prices pared gains as the two nations stopped short of announcing concrete steps to limit output.

"Everyone got very excited that Saudi Arabia and Russia were about to make a statement together and they were expecting them to say 'we are both formally announcing we are committed to the freeze,'" said Angus Nicholson, a market analyst in Melbourne at IG Ltd.

"Many market participants were quite disappointed."

Crude rose the most in two weeks on Friday after President Vladimir Putin said he'd like the Organization of Petroleum Exporting Countries (Opec) and Russia to agreeto a freeze, speaking before he travelled to China to meet Saudi Deputy Crown Prince Mohammed bin Salmanon Sunday.

That followed oil's rally last month amid speculation members of Opec and other producers would agree to cap production when they meet in Algiers. A similar proposal was derailed in April over Saudi Arabia's insistence that Iran participate.

Brent for November settlement lost as much as 20 US cents to US$47.43 a barrel on the London-based ICE Futures Europe exchange and was at US$47.49 at 9.25am in Tokyo. The contract rose 80 US cents to close at US$47.63 on Monday. The global benchmark crude traded at a US$1.81 premium to West Texas Intermediate for November.

WTI for October delivery was at US$45.06 a barrel on the New York Mercantile Exchange, up 62US cents from Friday's close.

Because of the US Labour Day holiday, electronic transactions from Monday will be booked with Tuesday's for settlement purposes.

BLOOMBERG