1. Islamic Republic targeting output of 4 million barrels a day

2. OPEC Gulf delegates say producers’ meeting unlikely this month

Oil fell from a three-month high as Iran said it would raise output to pre-sanctions levels before joining talks to freeze production.

Futures dropped as much as 2.5 percent in New York. Iran plans to boost output by about a third to 4 million barrels a day before it will consider joining any move to rebalance the market, the Iranian Students News Agency reported, citing Oil Minister Bijan Namdar Zanganeh. A meeting among major producers to cap output at January levels is no longer expected to take place this month, according to four OPEC delegates.

Oil has reversed losses after slumping to a 12-year low in February on speculation stronger demand and falling U.S. output will ease a surplus. The International Energy Agency said March 11 that prices may have reached their lowest point as shrinking supplies outside the Organization of Petroleum Exporting Countries and disruptions inside the group reduce the glut.

Yet Iran is sticking to plans to ramp up production as it seeks to regain lost sales after international sanctions were lifted in January. That sets it against suppliers such as Saudi Arabia and Russia, which have proposed freezing oil output as prices continue to languish 60 percent below their 2014 high.

‘Important Player’

“Iran’s comments always affect the market and they remain an important player,” Michael Poulsen, an analyst at Global Risk Management Ltd., said by phone. “What Iran is saying is logical from their point of view and they would do everything to raise their own revenue.”

West Texas Intermediate for April delivery fell as much as 95 cents to $37.55 a barrel on the New York Mercantile Exchange and traded at $37.80 as of 9:57 a.m. London time. The contract climbed 66 cents to $38.50 on Friday, the highest close since Dec. 4. Total volume traded Monday was about 20 percent below the 100-day average. Prices rose 7.2 percent last week.

Brent for May settlement fell 52 cents to $39.87 a barrel on the London-based ICE Futures Europe exchange. The contract advanced 0.9 percent to $40.39 on Friday, capping a 4.3 percent increase for the week. The global benchmark was at a premium of 51 cents to WTI for May.

Speculators’ net-long positions in WTI gained by 39,509 contracts of futures and options combined to 174,949 in the week ended March 8, according to the U.S. Commodity Futures Trading Commission. That’s the biggest increase since April and the highest level since October. Short positions fell by 38,233, the most in CFTC data going back to June 2006. Longs, or bets on rising prices, gained by 1,276.

Oil producers’ meeting; Iran boosting output; U.S. drilling rigs drop:

Major oil producers are likely to meet in April, possibly in Doha or Russia, OPEC Gulf delegates said.

Iran wants to boost output by 1 million barrels a day this year. The country produced 3 million barrels a day in February, according to data compiled by Bloomberg.

Zanganeh will meet Russian Energy Minister Alexander Novak on Monday, according to ISNA, which didn’t specify topics for discussion. Novak is leading a Russian business delegation to Tehran.

Active U.S. drilling rigs declined by six to 386 last week, falling for a 12th week to the lowest since 2009, according to Baker Hughes Inc.

 

Credit: Bloomberg