The remarks by Khalid al-Falih appeared to spell the end of any hope that a deal on production, which already looked unlikely, could be reached this week during informal talks between OPEC and non-OPEC producers at an energy conference in Algeria.
But at the same time, Mr. Falih, who oversees Saudi oil policy and is among the most influential voices in the energy industry, offered hope that OPEC could deliver a deal in November that would go beyond the kind of freeze on output growth that has been discussed, saying the cartel could move to reduce production, instead of just agreeing to hold it steady.
As prospects of an imminent deal faded, U.S. crude oil fell $1.26, or 2.7%, to $44.67 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell $1.38, or 2.9%, to $45.97 a barrel on ICE Futures Europe.
“I don’t think I’ve spoken with anyone that believes there is an actual OPEC agreement forthcoming,” said Ric Navy, senior vice president for energy futures at brokerage R.J. O’Brien & Associates LLC.
Even so, he said, prices could fall further this week if the group doesn’t announce a deal. “When the market rallies on OPEC, pick your point and sell,” Mr. Navy said.
Any deal would represent the first concrete action by the group to prop up the market since oil prices plummeted beginning in 2014. It also would represent a departure for Saudi Arabia, which has opened the spigots wide during the market slump in a fierce competition for customers with U.S. oil producers and others.
An effort in April to agree on a production freeze fell apart because Iran refused to participate. Iran’s cooperation is likely to remain a sticking point, Citigroup said in a note.
“The disparity between Saudi Arabia and Iran, in terms of what level of Iranian production is acceptable, will likely see talks at this meeting, or meetings in the near future, fail,” the bank said. “None of the current scenarios seem plausible.”
Goldman Sachs on Tuesday cut its oil-price outlook to $43 a barrel in the fourth quarter, down from its previous forecast of $50 a barrel. An OPEC deal could boost prices, the bank said, but the oversupply of crude and the potential for increased output from Libya and Nigeria would continue to weigh on the market.
Traders awaited weekly U.S. inventory data due Wednesday. Analysts surveyed by The Wall Street Journal expect the Energy Information Administration to report domestic crude stockpiles rose last week.
The American Petroleum Institute, an industry group, said late Tuesday that its own data for the week showed a 752,000-barrel drop in crude supplies, a 3.7-million-barrel decrease in gasoline stocks and a 343,000-barrel decline in distillate inventories, according to a market participant.
Gasoline futures settled down 0.87 cent, or 0.6%, to $1.3937 a gallon. Diesel futures fell 3.91 cents, or 2.7%, to $1.4099 a gallon.
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