TOKYO, Sept 7 Oil prices erased early losses to trade higher on Wednesday partly due to a weaker dollar, but gains were limited as market participants remained sceptical producers would reach an agreement to freeze output to rein in a global supply glut.
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But North Sea Brent closed 37 cents lower at $47.26 per barrel for November delivery on the Intercontinental Exchange in London.
His comments came after OPEC kingpin Saudi Arabia and Russian Federation said Sunday they would work together to boost the oil market, but stopped short of committing to a production freeze.
In this December 19, 2014 photo, oil pump jacks work in unison on a foggy morning in Williston, North Dakota.
Even though crude oil futures are now trading in a contango pattern, the forward month premium has diminished, indicating that there is still an oversupply, he said. “Then we were, ‘What if there really is no agreement?’ We came right back where we were”.
Saudi Arabia’s Foreign Minister Adel al-Jubeir had said on Tuesday it would go along with a freeze in oil output if other producers agreed one but cautioned that Iran, which is aiming to raise output to pre-sanction levels, could foil any attempt to limit output.
Crude oil sellers, however, cast doubt on the ability of OPEC and Non-OPEC producers to reach an agreement at the informal meeting in Algeria on September 26 – 28, due to their past history of failing to workout similar plans.
US commercial crude inventories likely dropped by 100,000 barrels last week after rising for two straight weeks, a preliminary Reuters poll showed on Tuesday. Because of Monday’s U.S. holiday, this week’s key American Petroleum Institute and U.S. Energy Information Administration’s weekly inventory reports have been delayed.
Official data from the U.S. Department of Energy on crude and refined product stocks will be released on Thursday.
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The dollar plunged after data Tuesday showed a shock slump in the key USA services sector, virtually wiping out any possibility of an interest rate hike this month. Japan’s Nikkei 225 finished down 0.41 percent, or 69.54 points at 17012.44. Japanese traders tend to sell stocks when the Yen increases because of its negative effect on Japanese exports.
