Oil prices fall 2% on doubts of OPEC production cut

Russia still plans to attend lower-tier talks on November 28 in Vienna ahead of the OPEC ministerial meeting on November 30, a Russian source familiar with the matter told Reuters.

Speaking to reporters upon his arrival, Iraqi oil minister Jabbar Al-Luaibi said he was optimistic Opec can reach an agreement “acceptable to all members”, but declined to comment when asked by IBTimes UK if he would be willing to make a concession. Iranian Oil Minister Bijan Namdar Zanganeh laid out his country’s position following talks with his Algerian and Venezuelan counterparts. Zanganeh will arrive in Vienna later on Tuesday.

Earlier this month, OPEC’s biggest producer Saudi Arabia offered to cut its output by 500,000 barrels per day (bpd). But Tehran has sent mixed signals including that it wanted to produce 4.2 million bpd.

We feel that other OPEC producers will fall in line if Iran and Saudi Arabia reach an agreement, and Iran has already agreed to numbers proposed in Algiers, so it’s not impossible that an agreement is reached.

Rhetoric from OPEC about a deal has been effective in supporting prices, said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy.

Falih was not expected to land in Vienna before Tuesday evening, leaving little time for traditional pre-meeting discussions with other ministers.

Should oil futures reverse directions once again and move to the upside, first resistance is near the mid-point of today’s wide trading range, near $46.00/barrel. The 14 banks in the survey predict that Global Brent crude will average at $56 a barrel next year while US benchmark West Texas Intermediate will average $54 a barrel next year.

“Oil market reaction will hinge on the credibility of the proposed action”, United States investment bank Jefferies said, adding recent output increases to record levels in many countries now required a deep cut to lift prices significantly.

Also at the start of the week, Iraq´s own Energy Minister reportedly said he was “optmistic” that a deal would finally be reached.

Oil prices fell over 1 per cent on Monday, extending declines from last Friday as doubts re-emerged over the ability of major producers to cut output at a planned meeting on Wednesday aimed at reining in global oversupply.

In Asia, OPEC’s biggest customer region, oil importers made clear they would not be happy with an artificial supply cut that hikes prices, and that in case of a cut they would seek more supplies from outside OPEC.

Iran and Iraq are resisting pressure from Saudi Arabia to curtail production, making it hard for the group to reach a deal. Prices fell to multi-year lows of $27 per barrel in January 2016.

A pact proposed on Monday would trim output by 1.2 million barrels a day from October levels, though it remains unclear whether the idea has the support needed for approval, a delegate said.