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US Crude Dips, Brent Crude Nears $50 as Output Freeze Hopes Dwindle

August 17, 2016 at 17:14 by Andrew Moran

US crude prices slightly dipped, while Brent crude prices mildly rose during the Wednesday trading session. Oil futures in the US fell as hopes for an oil production freeze have faded. They were also affected after it was reported there was a larger-than-expected decline in US crude supplies.

September West Texas Intermediate (WTI) futures tumbled $0.12, or 0.26%, to $46.46 per barrel at 16:56 GMT on Wednesday on the New York Mercantile Exchange. Oil has been retreating after modest gains over the past several trading sessions.

October Brent crude futures rose $0.29, Huge Bounce House or 0.59%, to $49.52 a barrel on London’s ICE Futures Exchange. The last time Brent topped $50 was in early June.

Ever since oil prices hit 12-year lows in February, oil prices have recovered about 70%.

Any hopes that members of the Organization of the Petroleum Exporting Countries (OPEC) would agree to freeze production levels in October have diminished. Although oil prices climbed late Tuesday because Russia confirmed it would attend formal meetings in two months, Iran hinted that it may not attend the informal talks in Algeria next month.

The same thing happened in April. Iran had walked away from negotiations that would have seen OPEC nations cap their output levels. Iran dismissing the idea at the time prompted Saudi Arabia to follow suit.

Venezuela, Kuwait, and Ecuador have urged OPEC to install a production freeze to allow oil prices to rise above $55 to $60 a barrel. These countries have seen their economies pummeled because of the substantial decline in oil prices. Venezuela, for instance, is on the verge of a financial collapse.

The 14-nation bloc is scheduled to sit down for an informal meeting in Algeria from September 26 to 28. OPEC will hold another round of talks in October in Vienna.

Meanwhile, US crude futures took a hit when the Energy Information Administration (EIA) released a new report regarding domestic crude supplies. The EIA stated that there was a decline of 2.5 million barrels in the week ending August 12. Gasoline supplies also slipped by 2.7 million barrels, and distillate stockpiles climbed 1.9 million barrels.

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