Brent oil extends drop, Iran spurns production freeze

Hong Kong - Brent dropped for a second day as Russia signaled Iran won’t join major producers in freezing output to manage a global glut.

Futures lost as much as 1.3% in London after falling 2.1% on Monday. Iran has “reasonable arguments” for not joining an alliance to cap production now, Russian Energy Minister Alexander Novak said after meeting with his Iranian counterpart.

Talkson the freeze are most likely to occur in Qatar’s capital Doha next month, according to Gulf OPEC delegates. US stockpiles probably expanded last week, keeping supplies at the most since 1930.

“Supply is still the key factor for the market,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “If there is a meeting and it does result in a decision on definitive action, that will be positive for prices, but history is against anything happening,”

Oil has rebounded after slumping to a 12-year low this year on speculation stronger demand and falling US output will ease a surplus. Iranian production increased last month by the most in almost two decades following the end of international sanctions, the Organisation of Petroleum Exporting Countries said in its monthly report Monday. Supply from Saudi Arabia was mostly unchanged.

Brent for May settlement declined as much as 50 cents to $39.03 a barrel on the London-based ICE Futures Europe exchange and was at $39.09 at 2:29 p.m. Hong Kong time. The contract slid 86c to $39.53 on Monday. The global benchmark was at a premium of 66c to West Texas Intermediate for May.

Freeze meeting

WTI for April delivery lost as much as 43c to $36.75 a barrel on the New York Mercantile Exchange. The contract fell $1.32 to $37.18 on Monday. Total volume traded was about 37% above the 100-day average.

No countries have received invitations or an agenda for a meeting in Doha, said four OPEC delegates, who asked not to be identified because the matter isn’t public. The Qatari capital is one option as a location for the talks, said Russia’s Novak at the Russian embassy in Tehran, adding that he hopes Iran’s Oil Minister Bijan Namdar Zanganeh will participate.

US supplies and OPEC output:

* US crude inventories probably rose by 2.5 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday.

* Iran increased output by 187 800 barrels a day to 3.13 million a day in February, the biggest monthly gain since 1997, OPEC said in its report.

* The OPEC report made no reference to the February 16 accord to freeze output, or to ongoing talks aimed at garnering support from other producers to participate.

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