Oil gains 2% as OPEC makes last-ditch bid to save deal

Arab News - - BUSINESS -

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.

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