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Oil trades near two-week low amid talk of Libya, Nigeria caps
[LONDON] Oil traded near the lowest closing price in two weeks, erasing earlier gains after an Opec minister said Libya and Nigeria may be requested to cap their production.
Futures were little changed in New York. The two African producers, exempt from the Opec-led cuts because of internal strife, have been invited to a July 24 meeting in Russia to discuss whether their production has stabilised, Kuwait's oil minister Issam Almarzooq said in Istanbul.
Libya and Nigeria together added 440,000 barrels a day of production in May and June as fields restarted, according to data compiled by Bloomberg.
Oil in New York and London remains in a bear market amid concerns elevated global oil inventories and rising supply will offset curbs by the Organization of Petroleum Exporting Countries and its partners including Russia. It's premature to talk about deepening output cuts, Opec Secretary-General Mohammad Barkindo said in Istanbul.
"Sentiment in the oil market is still negative," Giovanni Staunovo, an analyst at UBS Group AG said.
"In order to change that, a series of large inventory drawdowns in the US is probably needed."
West Texas Intermediate for August delivery was little changed at US$44.19 a barrel as of 9.25am London time, erasing a gain of as much as 1.1 per cent earlier.
Total volume traded was about 14 per cent above the 100-day average. Prices fell US$1.29, or 2.8 per cent, to US$44.23 on Friday.
Brent for September settlement fell 6 US cents to US$46.67 a barrel on the London-based ICE Futures Europe exchange. Prices slid 2.5 per cent last week. The global benchmark crude traded at a premium of US$2.30 to September WTI.
Deepening production cuts is not on the agenda for the July 24 meeting in St Petersburg, said Kuwait's Almarzooq, who is chairman of the committee monitoring compliance with the curbs.
If Libya and Nigeria are able to stabilise their output at current levels, they will be asked to cap supply as soon as possible, he said.
This idea of setting a ceiling for Libya and Nigeria "would give the market some clarity where the cap for the overall Opec production lies," Mr Staunovo said.