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Oil futures continued on to falter on Friday as Iraq's governor to Opec Falah Alamri claimed market circumstances were right for oil producers to seal an output freeze deal. At 6:29am BST, the Brent front month futures contract was down 0.86% or 41 cents to $47.24 per barrel, while the West Texas Intermediate was down 52 cents or 1.12% as both benchmarks extended losses in Asia.
Speaking at the Gulf Intelligence Energy Markets Forum in Fujairah, in the United Arab Emirates, Alamri said: "There was no deal in earlier attempts [in February and April in Doha] because the circumstances weren't right for producers to strike a deal.
"This time things are different because circumstances are little bit better and would help in reaching a deal."
Alamri added that some producers, including Iran, have managed to reach a better market share than earlier in the year. "Iran's output is now higher after the lifting of sanctions, making it the right time for a deal to be reached in Algiers [at the International Energy Forum on 26-28 September]."
However, market commentators remain unconvinced about a possible deal as Opec secretary general Mohammed Barkindo has said the Algiers meeting would be used for "consultation" and not for decision making.
Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB, said: "Opec and Russia's main dilemma is still the same; they cannot lift the oil price [through cuts] without stimulating US crude oil production.
"As we have experienced this summer this stimulation price point lies empirically somewhere around $45 per barrel. If Russia and Opec do want a higher oil price than that right now, they need to accept the fact that the US oil rig count will continue to rise as it has been doing through this summer."
Away from the oil market, precious metals continued to falter as the market absorbed the prospect of another US interest rate hike before the end of the year. At 6:53am BST, Comex gold for December delivery was down 0.38% or $5.10 to $1,339.60 an ounce, while Comex silver contract was down 0.92% or 18 cents to $19.92 an ounce.
Fawad Razaqzada, technical analyst at Forex.com, said because central banks' decisions have triggered a "risk-on" response in the markets, silver has actually outperformed gold, as the latter is deemed more of a safe haven commodity than the former.
"Unlike gold, silver has many industrial uses, so it tends outshine the yellow metal at times when risk assets are rallying. As a result, the gold/silver ratio has fallen below 67, its lowest level since early August. With the chart of the gold/silver ratio making lower lows and lower highs, we expect silver to continue outperforming gold."