ICE Brent crude, the global benchmark, rose 41 cents or 10.8% to $49.92 a barrel. The contract was down as much as 1.7% earlier in the day.
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International Brent crude oil futures were trading at $49.57 a barrel early on Wednesday, down 39 cents, or 0.8%, from their last close.
Prices had closed higher Tuesday on news that Iran was willing to join calls by Opec and Russian Federation for production curbs after scuttling previous efforts to reach a deal in April.
The third-largest producer in the Organisation of the Petroleum Exporting Countries, Tehran has been boosting output since the lifting of Western sanctions in January. Tehran refused to join a previous attempt this year by OPEC plus non-members such as Russian Federation to stabilise production, and talks collapsed in April.
Finally, Reuters cited a “source familiar with Iranian thinking”, in suggesting that Iran is actually “reaching its pre-sanctions production level” and will very soon be in a position to better “cooperate” with the other OPEC members.
After more than a year of the OPEC cartel being unable or unwilling to cut production to strengthen prices, Gene McGillian of Tradition Energy remained cautious about the report that Iran was reversing its stance and would work together with the rest of the group in their coming meeting next month.
After a seven-session rally that put oil into a bull market – a 20 percent jump in prices from recent lows – the commodity has taken a hiding since the start of this week.
Del Pino last week toured oil-producing countries, including Saudi Arabia, to convince OPEC for a production freeze after a similar plan failed in April.
It wrote, “Thawing relationships between parties in conflict in areas of disrupted production would be more relevant to the oil rebalancing than an OPEC freeze, which would leave production at record highs”.
Goldman also emphasized that since two regional rivals, Saudi Arabia and Iran, focus on their individual market share, it would be “unlikely to unilaterally accept a freeze or implement a jointly agreed one”.
Venezuela’s cost was more than double of those, at $27 a barrel, while Nigeria’s was the highest at $29.
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“The current price level of well over $40 does not provide non-OPEC producers with any kind of motivation to support oil prices by cutting or maintaining current production levels”, said Tamas Varga, analyst at London-based energy broker PVM.
