West Texas Intermediate crude oil was down 4.06% at $44.44 a barrel on Friday afternoon after getting hit by a one-two punch of bad news. First, Bloomberg reported that a member of the Saudi delegation said he did not expect an agreement to freeze oil production to be reached at next week’s meeting in Algiers, Algeria.
There had been hope that Saudi Arabia and Iran would be able to overcome their differences and agree on a freeze. Earlier Friday, Reuters reported that Saudi Arabia offered to reduce its oil production if Iran would agree to put a cap on its own output. At the time, Iran had not yet accepted or rejected the deal.
Then, the Federal Reserve Board said it was inviting public comment on a proposed rule that would make it harder for banks to trade physical commodities. In addition to requiring the banks to hold more capital for activities involving commodities, banks would also be required to tighten the amount of commodities they could hold. The comment period is open for 90 days.