Oil falls back after hitting November price high

US West Texas Intermediate (WTI) crude CLc1 was down 2 cents at $47.94 per barrel.

“We do expect some form of agreement, but oil market reaction will hinge on the credibility of the proposed action”, said USA investment bank Jefferies on Friday, adding that recent output increases to record levels in many countries now required a deep cut for it to significantly lift oil prices.

OPEC is on course to finalize the details of the Algiers accord to cut oil production at a meeting in Vienna on Tuesday, said a delegate from Nigeria.

If Opec cuts and oil rises toward US$60 a barrel, there may be a significant increase in output from other countries including the US, International Energy Agency Executive Director Fatih Birol said on Bloomberg Television. That would imply a supply cut of more than 1.2 million barrels per day, according to Reuters calculations.

For Russia, a potential freeze in oil output will mean a cut in planned production for 2017 by up to 300,000 barrels per day, according to Russian Energy Minister Aleksandr Novak.

“Secondly a more comprehensive agreement would spell out the obligations of the other 11 countries in response to eventual production upside from the 3 exempt countries (Iran, Libya, Nigeria)”.

Its Economic Commission Board, comprised of the national representatives of the 14 member countries who report to their respective oil ministers, concluded a two-day meeting at the group’s Vienna headquarters on Thursday.

Dominick Chirichella from the New York-based Energy Management Institute believes that there is still only a 50% chance that OPEC will make any meaningful cuts to output.

Should OPEC and non-OPEC members reach a deal to cut one million b/d and 880,000 b/d in production, respectively, it would immediately help the market turn into a supply deficit and help erode record stocks amounting to more than billion barrels.

Oil declined in NY as OPEC members failed to agree on the role of Iraq and Iran in a supply deal just one week before the group’s official summit.

Oil prices fell back Tuesday, wiping out morning gains, as the intraday volatility engulfing the market continued to be fueled by headlines regarding the forthcoming meeting of OPEC members due to take place November 30. Iran has insisted that it should be allowed to restore output to pre-sanctions levels, which it pegs at about 4 million barrels a day.

Doubts weighed over whether Saudi Arabia and Iran could put their geopolitical disputes aside and whether countries whose finances are in dire straits due to low oil prices would resist the urge to pump crude at high rates.