Oil drops ahead of coming OPEC meeting

OIL prices dipped yesterday with analysts expecting volatility in the run-up to a producers’ meeting next week.

Around 1130 GMT, Brent North Sea crude for delivery in November was down 48 cents at $45.46 a barrel compared with Monday’s close.

US benchmark West Texas Intermediate for October shed 35 cents to $42.95 a barrel.

The commodity plunged last week on supply glut worries but bounced slightly on Monday after OPEC member Venezuela said a deal to limit output was close.

Unrest in key producers Libya and Nigeria also raised the prospect their exports would be hit.

Venezuelan President Nicholas Maduro said on Sunday that participants in talks by the 14-nation OPEC cartel and Russia in Algeria from September 26-28 are working on a deal.

But some analysts said that in the absence of a firm agreement, prices will continue to swing.

“The credibility of bullish production freeze rhetoric from Venezuela is understandably being questioned in the run-up to next week’s Algiers meeting, while worries about additional supply [Nigeria, Libya] worsening the global glut add to the mix,” noted analysts at Accendo Markets.

Crude prices have been dogged by a stubborn supply glut since mid-2014, with prices hitting near 13-year lows in February.

A previous Saudi-led attempt to freeze output fell apart in April when Iran, which had just emerged from years of Western nuclear- l i nked s ancti ons, refused to take part.

CMC Markets Singapore analyst Margaret Yang said traders are also “waiting for this week’s [US] crude inventory data to find clues of any changes of the supply-demand relationship”.

The US Energy Department is due to release the stockpiles figures today.

“Gains on Monday were wiped out in trading on Tuesday for oil, as many analysts predict a significant increase in US inventories of over two million barrels, which would indicate ongoing global oversupplies,” said analyst Bill Hodder at broker Love Energy.

“These concerns were backed up by comments fromVenezuelan Oil Minister Eulogio Del Pino, who suggested global production would need to be reduced about 10 percent to fall back in line with consumption.”