Oil Down in Early Trade

NEW YORK (DTN) -- New York Mercantile Exchange oil futures fell at the start of regular trade Tuesday morning as hope for a deal this week to curb crude oil production by the Organization of Petroleum Exporting Countries were dashed by bearish statements today from Saudi Arabia and Iran.

Oil ministers from the two rivaling OPEC nations said they remained far apart during their consultative discussions ahead of informal talks in Algiers to stabilize the market, according to the latest wire service reports.

OPEC and non-OPEC oil ministers are in Algiers for the International Energy Forum that started Monday and will continue through Wednesday (9/28).

Iran's Oil Minister Bijan Zanganeh and his Saudi counterpart Khalid al-Falih today downplayed the prospect for an agreement. Zanganeh said they were in Algiers to talk but not to make a deal, and Iran's production target remains at 4.0 million bpd. He said they were still engaged in consultations, and added, "We will try to reach agreement in November."

Al-Falih confirmed differences remained between Saudi Arabia and Iran's positions on supply, saying they would continue to consult with other OPEC members and non-OPEC producers and consumers.

The statements dulled optimism that had lifted oil futures in recent days, setting the stage for a fresh round of profit-taking.

At last look, NYMEX November West Texas Intermediate crude oil futures fell $1.27 to $44.66 bbl while ICE November Brent futures tumbled $1.21 to $46.14 bbl. NYMEX October ULSD futures dropped 3.70cts to $1.4120 gallon while NYMEX October RBOB futures fell 2.26cts to $1.3798 gallon.

OPEC will hold its regularly scheduled biannual summit in Vienna in November and will revisit the issue, but doubts over a production agreement are mounting.

Domestically, the market awaits oil inventory data covering the week-ended Sept. 23 that is scheduled for release this afternoon by the American Petroleum Institute, and on Wednesday morning by the U.S. Energy Information Administration. Analysts are projecting a 3.0 million bbl build on domestic crude oil inventories, and are mixed in their outlooks on refined products.

In currency trade, the U.S. dollar index rose this morning, with a stronger greenback bearish for oil futures.

George Orwel can be reached at george.orwel@dtn.com