LONDON (Dow Jones)--Crude oil futures maintained their gains in London Monday, after weekend reassurance on the global economy from Group of 20 finance ministers helped boost sentiment.
But the market was very quiet.
"Trading conditions are expected to remain thin through the course of the day with the U.S. markets closed for Labor Day," said Nimit Khamar, an analyst at Sucden Financial Research.
At 1505 GMT, the front-month October Brent contract on London's ICE futures exchange was up 52 cents at $67.34 a barrel.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $68.60/bbl, up 58 cents in the Globex electronic session.
The ICE's gasoil contract for September delivery was up $9.00 at $547.50 a metric ton, while Nymex gasoline for October delivery was up 5 points at 177.68 cents a gallon.
Market participants are looking ahead to Wednesday's meeting of the Organization of Petroleum Exporting Countries in Vienna, Austria, when the group is widely expected to decide to leave its total production volume unchanged.
Saudi Arabia is happy with the current price level and won't risk jeopardizing the recovery of the global economy by pushing oil prices toward $100/bbl too early, said Torbjorn Kjus, analyst at DnB Nor Bank.
OPEC faces a difficult situation as it would like to see Organization for Economic Co-operation and Development oil stocks cut to 53-days of coverage. However, further production cuts to reach that point risk pushing prices upwards very quickly.
Kjus pointed out that if oil prices increase to $90/bbl from $70/bbl, this could add almost $70 billion to the yearly U.S. imports bill, and Saudi Arabia is unlikely to risk this.
"The global economy is too fragile, and such increased imports costs to the world's most important economy could risk jeopardizing the U.S. economic recovery," he said.
The group would face difficulty cutting quotas as a number of members aren't sticking to their current allocation, and compliance would be tough to enforce. Scrutiny of Nigeria and Angola's monthly export schedules, seen by traders of West African crude based in Europe, reveal both member countries are intending to ship more than their quota in October.
Meanwhile, lots of attention was trained on the latest report from the Commodity Futures Trading Commission. Despite a big drop of 28% in net long position in crude oil futures held by large speculators in the week ended Sept. 1, index traders' role wasn't as significant as expected.
"The share of index positions as a percentage of total open interest remains extremely small and supports our view and methodology that index traders have had very little influence on prices, where fundamentals remain the key driver," analysts of Barclays Capital said in a research note.
-By Sherry Su, Dow Jones Newswires; +44(0)20-7842-9329; sherry.su@dowjones.com
