Oil climbed with OPEC’s secretary-general set to visit Baghdad on Tuesday for talks aimed at resolving a deal on output after Iraq said it should be exempt from planned cuts.
Futures rose as much as 0.8 percent in New York after falling 0.7 percent Monday. Mohammed Barkindo will meet with Iraq’s prime minister and oil minister, according to people familiar with the matter, after the Organization of Petroleum Exporting Countries’ second-biggest producer said Sunday it should be excluded due to conflict with Islamic militants. U.S. crude stockpiles rose last week, a Bloomberg survey shows before government data Wednesday.
Oil has fluctuated near $50 amid uncertainty about whether OPEC can implement an accord to reduce oil output when its members gather at an official meeting in November. A committee will meet later this month to try to resolve differences over how much individual members should pump. The group agreed to reduce output last month, pushing prices up and bringing some drilling back in the U.S., which has in turn prevented crude from rising higher.
“The focus stays with OPEC secretary-general’s efforts to get as many on board to cut production as possible,” said Ole Sloth Hansen, head of commodity strategy at Denmark’s Saxo Bank A/S. “The market will play this with continued skepticism but as long as negotiations are ongoing the selling appetite seems pretty low.”
West Texas Intermediate for December delivery was at $50.88 a barrel on the New York Mercantile Exchange, up 36 cents, at 9:34 a.m. in London. Prices slid 33 cents to close at $50.52 on Monday. Total volume traded was about 31 percent below the 100-day average.
Brent for December settlement was 32 cents higher at $51.78 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 32 cents, or 0.6 percent, to $51.46 on Monday. The global benchmark crude was at a premium of 89 cents to WTI.
Iraq can accept a decision to freeze output based on an “actual” output level of more than 4.7 million barrels a day rather than the lower figure the group uses from secondary sources, Oil Ministry spokesman Asim Jihad said Tuesday. OPEC pegs Iraqi production at less than 4.2 million barrels a day.
“Current oil prices contain expectations for a cut but when everybody seeks exemptions it will be difficult to cut output,” said Carsten Fritsch, commodity analyst at Commerzbank AG. “OPEC is desperately trying to keep expectations for a cut alive.”
The 14-member group is also hoping Russia, the world’s biggest oil producer, joins in. The country is making progress toward an output agreement with OPEC, Russian Energy Minister Alexander Novak said Monday after talks with officials from the group in Vienna. The discussions addressed “ concrete” production levels, he said, declining to elaborate.
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