Oil prices fell in Asian trade on Wednesday, reversing gains earlier in the week as uncertainty increases as to whether an oil cut will be agreed at next week’s OPEC meeting.
OPEC is set to debate an output cut of between 4.0 – 4.5 percent for all members except Libya and Nigeria next week, a Reuters source said on Wednesday. Currently oil output among OPEC members stands at around 34 million barrels a day, with an agreement expected to reduce this by over 1.2 million barrels per day. However, underlying tensions between Iraq and Iran may still hinder any agreement.
“The best case out of the OPEC meeting is an agreement to get production back to the 33 million barrel levels. I think if that happens there is scope to see oil surge up into the mid-$50s a barrel at least temporarily,” Ric Spooner, chief market analyst at CMC Markets in Sydney, told Reuters.
An oil rout has affected prices for months, with an excess in supply filling the market with oil far in excess of demand. At the September meeting OPEC agreed to reduce production to between 32.5 million and 33.0 million bpd in an effort to prop up prices, but Iran, Iraq and Saudi Arabia have as far been unwilling to commit to any concrete agreement.
WTI Crude fell 0.04 percent on Wednesday to $48.01 a barrel, with Brent Crude down 0.1 percent at $49.07 (0926GMT). A stronger dollar also weighed on prices, alongside a weak trading day as the US gears up for its Thanksgiving holiday on Thursday.
Despite Russia remaining outside of OPEC, President Vladimir Putin has consistently lent his support to any agreement designed to drive down prices. However, his preferred stance is an output freeze rather than a cut.