Oil pared gains as rival OPEC members Saudi Arabia and Iran met in Vienna for a second day before the wider group gathers in Algiers to discuss action to stabilize the market.
Futures dropped as much as 1.2 percent in New York after rising 2.2 percent on Thursday. Officials from the two countries, whose rivalry derailed an oil supply accord earlier this year, are yet to reach an agreement, a person who was briefed on the discussions said. Now is the right time for a deal, according to Falah Al-Amri, Iraq’s governor to OPEC. Prices are unlikely to climb above $50 a barrel unless the group reduces production, he said.
Oil has fluctuated since August’s rally on speculation the Organization of Petroleum Exporting Countries and Russia will agree on ways to stabilize the market when they meet Sept. 28. While Venezuelan President Nicolas Maduro said members are close to a deal, all but two of 23 analysts surveyed by Bloomberg said an agreement to limit production is unlikely. Freezing output was proposed in February, but a meeting in April ended with no final accord.
“The upside for oil is fairly limited, the range that prices have been trading in during recent months is likely to hold,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The market is still in surplus and hasn’t yet arrived at a balance. If there is an agreement, it’ll probably be a token deal where nations agree to a production cap near the upper limit of capacity.”
West Texas Intermediate for November delivery fell as much as 56 cents to $45.76 a barrel on the New York Mercantile Exchange and was at $45.81 at 1:33 p.m. in Hong Kong. The contract advanced 98 cents to $46.32 on Thursday, the highest close in two weeks. Total volume traded was about 50 percent below the 100-day average. Prices are up 6.4 percent this week.
Brent for November settlement lost as much as 46 cents, or 1 percent, to $47.19 a barrel on the London-based ICE Futures Europe exchange after rising 1.8 percent to $47.65 on Thursday. Prices are up 3.2 percent this week. The global benchmark was at a $1.45 premium to WTI.
Saudi Arabia and Iran met at OPEC headquarters in preparation for informal talks in Algiers, according to two people briefed on the discussions. OPEC Secretary-General Mohammed Barkindo visited Qatar and Iran this month to build consensus before the gathering. Russian President Vladimir Putin said Sept. 2 that the producers can overcome their divisions to reach a deal.