The commodity plunged last week on supply glut worries but bounced back slightly yesterday after OPEC member Venezuela said a deal to limit output was close.
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While talking about freezing the output helped to put a floor under oil prices during the last few months, the outcome of the Organization of the Petroleum Exporting Countries meeting in Algeria from September 26 to 28 seems more redundant by the day.
Oil prices increased on Monday as investors raised expectation for a market support deal from OPEC (Organization of the Petroleum Exporting Countries).
United States oil (WTI) prices have edged up on hopes the planned restart of country’s main petrol pipeline after a leak more than a week ago will boost demand, while Brent has slipped amid scepticism over a proposed deal to freeze production.
“We think there is a great window of opportunity for a freeze here.” .
Supply needs to be cut by 1 million barrels a day to rebalance the market and stabilize prices, he said. Will we get there?
His comments appeared to play down suggestions of a major decision at the Algiers meeting where Russia, Iran and other major oil producers were due to meet on the sidelines.
The group’s members are close to a deal, according to Venezuelan President Nicolas Maduro, while OPEC’s secretary-general said an extraordinary meeting is possible if ministers reach a consensus.
US West Texas Intermediate (WTI) crude futures CLc1 were down 22 cents at $43.08 a barrel.
The market was boosted by news from Russian Federation after the continuous disappointment during the recent weeks when talks between OPEC members and Russian Federation came to a halt. He didn’t specify whether they would discuss a pact to freeze production.
Saudi Arabia and Russian Federation agreed this month to cooperate in oil markets, saying they could limit future output. Global oversupply has led to a dramatic price drop from $115 per barrel two years ago to the current $45.
Nevertheless, analysts said any gains could be tempered by caution ahead of the Federal Reserve’s Federal Open Market Committee (FOMC) decision on interest rates later on September 21. “There are some solutions being drawn up, and there are some scenarios being worked on”. The country’s official envoy to OPEC, Mohamed Oun said it won’t stop increasing output until it reaches 1.6 million bpd – the level last seen during Gaddafi’s rule.
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Before it’s here, it’s on the Bloomberg Terminal. The war-torn country now produces only 300,000 bpd.
