Oil gains 2% as OPEC makes last-ditch bid to save deal
NEW YORK: Oil prices gained more than 2 percent on Monday in volatile trading after falling as much as 2 percent, recouping losses as the market reacted to the shaky prospect of major producers being able to agree output cuts at a meeting on Wednesday.
US West Texas Intermediate crude futures rose 99 cents to $47.05 a barrel, a 2.2 percent gain by 1544 GMT. Brent crude rose 98 cents to $48.22 a barrel, a 2.1 percent gain.
Trading turned choppy after prices tumbled more than 3 percent on Friday as doubts grew over whether the Organization of the Petroleum Exporting Countries would reach agreement to help curb a global supply overhang that has more than halved prices since 2014.
In Vienna, delegates said OPEC experts have made some progress in talks on finalizing a preliminary deal to cut oil output but are yet to resolve differences over the production levels of Iran and Iraq.
The talks have been ongoing for seven hours, the delegates said on Monday.
Market watchers expected prices to remain volatile until OPEC’s Wednesday meeting offers the market a definitive answer as to whether OPEC and non-OPEC producers can agree cuts.
“Through Wednesday, trade will be very headline-driven,” said Tony Headrick of CHS Hedging. “Comments coming out of pre-meetings, particularly from Iraq this morning, are really a driver today.”
On Sunday, Saudi Energy, Industry and Mineral Resources Minister Khalid Al-Falih said the oil market would balance itself in 2017 even if producers did not intervene, and that keeping output at current levels could therefore be justified.
The statement stoked simmering disagreement between OPEC and non-OPEC crude exporters such as Russia over who should cut production by how much.
By Monday, OPEC was scrambling to rescue the deal, with analysts warning of a sharp price correction if they fail, and prices spiked as Iraq’s oil minister said the country would cooperate with the group to reach an agreement “acceptable to all.”
A meeting scheduled for Monday between OPEC and nonOPEC producers was called off after Saudi Arabia declined to attend, while concerns over the feasibility of a deal pushed the crude oil volatility index close to a nine-month high.
Others warned that even if some form of an output restriction is announced after producers meet in Vienna on Wednesday, the details matter greatly.