NEW YORK (DTN) -- New York Mercantile Exchange oil futures turned lower at the start of regular trade Tuesday despite a weaker dollar and an agreement announced Monday by Saudi Arabia and Russia to cooperate in stabilizing the oil market, with the decline seen driven by profit-taking after a rally on Labor Day.
Russian President Vladimir Putin and Saudi Deputy Crown Prince Mohammed bin Salman met in China on the sidelines of a G-20 Summit and issued a joint statement Monday that said they agreed to coordinate efforts to freeze production in the future, although they would not act immediately.
Russian Energy Minister Alexander Novak said the two countries were moving toward a strategic energy partnership and that a high level of trust would allow them to address global challenges. Saudi Energy Minister Khalid al-Falih said their cooperation would encourage other members of the Organization of Petroleum Exporting Countries to come on board.
Analysts said, however, that the initial enthusiasm following Monday's announcement is now gone, with the joint statement less definitive than the market had expected. Analysts did say that even if the Saudi-Russia agreement fell short of expectations, it marks a significant development in the two countries' relationship.
The Saudi-Russian pact comes ahead of informal talks by OPEC in Algiers Sept. 26-28 on the sidelines of the International Energy Forum to discuss potential action by the producer group to stabilize the oil market. The planned meeting, announced on Aug. 8, rallied oil prices through much of August, but skepticism that a deal would be reached that addresses production emerged late last month to trigger long liquidation.
At 9:00 AM ET, NYMEX October WTI crude futures had eased 27cts to $44.17 bbl, reversing off a four-day high at $46.53. The November Brent contract on the IntercontinentalExchange was down 92cts to $46.71 bbl.
NYMEX October ULSD futures edged down 0.22cts to $1.4074 gallon after reversing off a $1.4747 four-day spot high. NYMEX October RBOB futures were up 0.26cts at $1.3042 gallon after posting a $1.3621 three-day spot high, but have since reversed.
The dollar eased as the prospect for a hike in the federal funds rate later this month dimmed following last week's poor payroll report. The Bureau of Labor Statistics reported Friday that 151,000 jobs were created last month, falling short of an expected 180,000, while the unemployment rate held steady at 4.9%.
George Orwel can be reached at email@example.com
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