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UPDATE 9-Brent crude futures ease as hope for output freeze fades

Published 07/09/2016, 05:24 am
© Reuters.  UPDATE 9-Brent crude futures ease as hope for output freeze fades
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* U.S. crude edges up after Monday holiday

* Russia, Saudi Arabia sign pact, may limit output in future

* Saudi says Iran may spoil any deal to freeze output

* Traders say Genscape reported U.S. crude draw from Cushing (New throughout, updates prices and market activity to settlement)

By Scott DiSavino

NEW YORK, Sept 6 (Reuters) - Global benchmark Brent crude fell almost 1 percent on Tuesday as hopes waned for an agreement between two of the biggest oil producers to freeze output to tackle a global supply glut.

Brent had jumped 5 percent on Monday, after Saudi Arabia and Russia agreed to cooperate in world oil markets. But Brent pared gains later that session after Saudi Energy Minister Khalid al-Falih said there was no need to freeze output for now. his Russian counterpart Alexander Novak said he was open to ideas on what cut-off period to use if countries chose to freeze output, and said even production cuts could be considered.

On Tuesday, Brent LCOc1 futures for November delivery fell 37 cents, or 0.8 percent, to settle at $47.26 a barrel. U.S. crude CLc1 , meanwhile, rose 39 cents, or 0.9 percent from Friday's settlement, to $44.83 per barrel. U.S. crude did not settle on Monday due to the Labor Day holiday.

U.S. trading was thin following the long Labor Day holiday weekend. Traders said U.S. crude was supported by Genscape data showing a draw of some 700,000 barrels last week at the Cushing, Oklahoma, delivery hub for U.S. crude futures.

The Organization of the Petroleum Exporting Countries and non-OPEC producers such as Russia will hold informal talks in Algeria on Sept. 26-28. Many in the market are skeptical a deal will happen.

"The reaction so far suggests that talk is no longer enough to support prices; the market needs to see action," Tim Evans, energy futures specialist at Citi Futures, said in a note.

"While talk of a production freeze is easy, achieving one will be more difficult, with Iran still poised to increase output to 4.0 (million barrels per day) and Nigeria plotting a recovery."

Iran has been trying to regain market share after the United States and other nations lifted nuclear-related sanctions.

Saudi Arabia said on Tuesday it would go along with a freeze in oil output if other producers agreed, but cautioned that Iran could foil any attempt to limit output. believe again the spoiler will be the Iranians. You can't expect other countries to freeze while you reserve the right to increase your production," Saudi Foreign Minister Adel al-Jubeir told reporters in London.

Oil prices are half their level of mid-2014, hurting producing nations' income. OPEC and Russia tried this year to curb the glut with an output freeze, but the deal collapsed in April due to tension between Saudi Arabia and Iran.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ TECHNICALS-U.S. oil may bounce to $45.70

TECHNICALS-Brent oil to test resistance at $48.54

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