Oil ended little changed on Tuesday in volatile trade that saw prices rise and fall by $1 a barrel depending on the latest comment from Opec officials at a technical conference in Vienna on whether the cartel members would agree to an output cut. Officials at the Organisation of the Petroleum Exporting Countries (Opec) meeting tried to hammer out the details of an agreement to cut output before a formal meeting on November 30.
Brent futures gained 22 cents, or 0.45 percent, to settle at $49.12 a barrel, its highest close since the end of October, while US crude lost 21 cents, or 0.44 percent, to finish at $48.03. During the session, Brent gained $1 a barrel, bringing it to within four cents of $50, its highest since October 28, after comments from a Nigerian official at the Opec technical meeting that it was likely all countries would be "on board" by the end of the day.
But, prices fell, with US futures down $1 a barrel, following reports the 14-member cartel would defer a decision on a deal until the November 30 meeting due to the opposition of Iran and Iraq. "We do not have a clear path to a decision on November 30 and that is what the market was looking for so we are in for another eight days of uncertainty," said James Williams, president of energy consultant WTRG Economics in Arkansas. The premium of US futures for the second month over the front-month, meanwhile, hit 95 cents, its highest since April, as Opec rhetoric boosts later dated crude contracts.
Opec is trying to bring its members and non-Opec producer Russia to agree on a co-ordinated cut to prop up the market, beset by a two-year glut in supplies, by bringing production into line with consumption. It said at the end of September it aimed to cut production to between 32.5 million and 33 million barrels per day compared with its recent record output of around 33.8 million bpd.
While a ceiling for overall Opec production may be agreed by November 30, it is unclear whether clear quotas per member state would be set. Some countries, such as Nigeria, Iraq, Libya and Iran, argue they should be exempt because their output has been hit by conflict or sanctions. "Ultimately, it looks as if Saudi Arabia and its allied Gulf neighbours will reduce production on their own," analysts at Commerzbank said.
"No ground-breaking agreement on production caps or cuts should be expected from the Opec meeting. The oil market is likely to remain oversupplied for some time yet even after the Opec meeting, especially since US oil production will soon start rising again." US commercial crude oil inventories were forecast to have risen for a fourth consecutive week, gaining 700,000 barrels last week, ahead of data from the American Petroleum Institute at 4:30 pm EST (2130 GMT).
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