Oil traded near $49 a barrel before representatives of OPEC nations meet with their allies to discuss why some of them are falling behind in pledges to reduce production.
Futures fell 0.3 percent in New York after climbing 1.1 percent Friday. The two-day meeting in Abu Dhabi starting Monday and co-chaired by Kuwait and Russia will examine why some participants in the deal to collectively reduce global supply aren’t fully implementing their cuts. The number of U.S. drill rigs targeting crude fell by one last week, according to Baker Hughes Inc.
Oil in New York was unable to hold its first advance above $50 a barrel since May as signs of rising global supply eroded optimism that output curbs by the Organization of Petroleum Exporting Countries and its partners are rebalancing the market. Compliance to cuts fell to 86 percent in July, the lowest level since January, according to a Bloomberg survey.
“The big players are going to remain compliant, or at least say they are,” said Ric Spooner, an analyst at CMC Markets in Sydney. “Markets continue to assess the overall demand, supply and inventory situation as it unfolds. The likely range for oil at the moment is the mid-$40s to the low $50s.”
West Texas Intermediate for September delivery was at $49.41 a barrel on the New York Mercantile Exchange, down 17 cents, at 2 p.m. in Hong Kong. Total volume traded was about 10 percent below the 100-day average. Prices added 55 cents to $49.58 on Friday, trimming the weekly loss to 0.3 percent.
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Brent for October settlement dropped 18 cents to $52.24 a barrel on the London-based ICE Futures Europe exchange. Prices rose 41 cents to $52.42 on Friday, reducing the weekly decline to 0.2 percent. The global benchmark crude traded at a premium of $2.68 to October WTI.
Saudi Arabia said last month that it planned to increase pressure on nations that didn’t comply with their pledged cuts. Compliance by members from OPEC slid to 78 percent in June, compared with 82 percent from its 10 non-OPEC partners, according to the International Energy Agency.
U.S. drillers reduced the number of rigs to 765, according to data Friday from Baker Hughes. That’s the second drop in three weeks. Libya’s Sharara oil field, the nations biggest, stopped production after a workers’ protest, according to a person familiar with the situation.