Oil price holds near $40 as Kuwait strike weighed against Doha failure

London: Oil held near $40 a barrel as investors weighed a strike in Kuwait that cut output by more than half from the Opec member against the failure of producers to reach a deal to limit supplies.
Futures were little changed in New York. Prices slipped 1.4 per cent on Monday after talks in Doha between the world’s biggest producers ended with no final accord to freeze output. A labour strike in Kuwait that slashed output by about 1.7 million barrels a day entered a third day.
The Doha talks collapsed on Sunday after Saudi Arabia insisted it wouldn’t restrain output without commitments from other major producers including Iran, which has ruled out freezing for now. That’s also raised concern that the Middle East producers would boost supplies amid an intensifying clash for market share. Meanwhile, the "substantial impact” of Kuwaiti oil production cuts has "significantly” added to other global disruptions, according to industry consultant FGE.
"This is quite a significant disruption to production” from Kuwait, Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. "The recent overall strength of the oil market over the past couple of months or few weeks has not primarily been about Doha, it has primarily been about an overall improvement in the market’s outlook for medium-term fundamentals.”
West Texas Intermediate (WTI) for May delivery, which expires on Wednesday, traded at $39.73 a barrel on the New York Mercantile Exchange, down 5 cents, at 2:22pm Tokyo time. Prices on Monday fell as much as 6.8 per cent before settling at $39.78 a barrel. Total volume traded was about 10 per cent below the 100-day average. The more-active June contract lost 14 cents to $41.05 a barrel.
US inventories
Brent crude for June settlement was at $42.73 a barrel on the London-based ICE Futures Europe exchange, down 18 cents. The front-month contract dropped 19 cents to $42.91 on Monday. The global benchmark traded at a $1.68 premium to June WTI.
Oil workers in Kuwait are striking to protest cuts in pay and benefits as Middle Eastern crude exporters, reeling from lower oil income, cut subsidies and government handouts. The walkout is the first by oil workers in Kuwait since at least 1996, according to Middle East Economic Digest.