Members of the producer group are presently more concerned with market share than they are with stabilizing prices, leaving the possibility of a production freeze unlikely. West Texas Intermediate (WTI) crude rose 72 cents to $48.05 per barrel, a 1.5% gain.
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Brent for October settlement increased 62 cents, or 1.3 percent, to $49.67 a barrel on the London-based ICE Futures Europe exchange on Thursday.
Iranian Minister of Petroleum Bijan Zanganeh on Friday said his country wanted its pre-sanctions share of the crude market, in comments that suggested Tehran might not be on board with efforts in the OPEC cartel to agree on an output cap together with Russian Federation.
In the early hours on Friday, crude oil was weaker following the comments made by Khalid Al-Falih, Saudi Arabia’s energy minister.
In an interview with Bloomberg News, Falih said: “I don’t believe that an intervention of significance is required”.
Gross short positions among speculators in US crude fell by a massive 66,247 contracts to 96,985, the lowest in two months, in a sign that much of the rally over the last few days have been driven by short covering.
Richey said that the oil market’s focus remains on “next month’s [output] “freeze meeting” between global producers, which is continuing to influence a short seller strike [and that] is inherently bullish for the near-term”.
The Saudi minister’s comments dampened expectations of a meaningful intervention into the market, which has been dogged by oversupply for more than two years.
But prices have taken a beating this week on concerns about prospects for success at the September meeting in Algiers.
But he added that a “freeze signifies that everybody is content with where the market is today and they want it to be trending in that direction”.
However, even if a deal is reached in Algeria, there are doubts about the impact a production cap may have on an already oversupplied market.
According to the oil ministry Iran pumped about 4 million barrels per day (bpd) before the sanctions.
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“While an agreement to limit production at current levels would largely be a symbolic gesture, judging by the market reaction to the announcement of these talks that might be enough to keep prices firm”, said Michael McCarthy, a chief market strategist in Sydney at CMC Markets. US investment bank Jefferies said on Friday that despite recent bearish data like record OPEC output and soaring Chinese fuel exports, it expected “the oil market to come into balance in Q4 and for inventory draws to accelerate into 2017, setting the conditions for a sustainable fundamental price recovery”.
