Oil prices yesterday rose modestly in Asia ahead of a producers’ meeting this week that might agree to cap supplies, but analysts said that optimism should be tempered by experience of two years of gluts and disagreement among OPEC members.
OPEC and Russia were scheduled to meet yesterday on the sidelines of the International Energy Forum (IEF) in Algiers, looking for ways to stabilize prices that have been depressed since 2014.
Pre-forum talks last week between OPEC kingpin Saudi Arabia and Iran were bleak, with neither willing to commit to freezing production, sending prices plunging more than 3 percent on Friday.
However, both major contracts rebounded yesterday after Algeria’s energy minister said all options were still on the table, OANDA market analyst Jeffrey Halley said.
“With OPEC meeting on the sidelines of International Energy Forum for the next three days, and with the first [US] presidential debate happening tomorrow morning [today] Asia time, expect oil to move on comments that range from hope to reality,” he said.
At about 7:40am GMT US benchmark West Texas Intermediate for November delivery was up US$0.29 at US$44.77 while Brent crude gained US$0.23 to US$46.12.
Despite the positivity, fears remain that an agreement cannot be reached. Previous attempts in April were scuppered by Iran.
“Our base-case assumption is no freeze; yet, members are likely to make statements highlighting that they are closely watching market developments and will host a subsequent exceptional meeting if deemed necessary,” British bank Barclays said in a research note.
“Thus, we recommend paying less attention to Algiers and more attention to a naturally tightening oil market balance that precludes the group from having to make any difficult decisions,” the bank said.
Oil prices have been hammered by a stubborn supply glut since late 2014.
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