Oil minister: Iran backs OPEC moves geared toward stability

Oil prices edged 1 percent higher on Wednesday in a volatile session as the market weighs the prospect of higher supplies against the possibility that the world’s top producers could agree on a production freeze.

But remarks from the Saudi oil minister poured cold water on speculation of a widespread oil freeze, with Khalid al-Falih saying it was not something being considered in the immediate future.

London Brent crude for November delivery was up 12 cents at $47.75 a barrel by 0330 GMT (1130 ET), after settling up 80 cents on Monday.

On Monday, Russia and Saudi Arabia agreed to cooperate in the world oil market to overcome a supply glut that has sent oil prices to record lows. They also confirmed that stabilizing the global oil market is going to be one of the key issues on the agenda.

“The longevity of the rally being how long before reality bites with the OPEC meeting still three weeks away”. The CBOE Crude Oil Volatility Index jumped about 6% today on news that prominent OPEC nations signed an oil-cooperation agreement, which could lead to a freeze in output levels.

Crude spiked sharply on Monday after Saudi Arabia and Russian Federation vowed to work together to support the oil market, but prices quickly declined as the pact ceased to deliver imminent action to solve the oil glut. That is “slightly” above 4 million barrels a day, which may be achieved by the end of this year or early next year, he said. Iranian President Hassan Rouhani reiterated the country’s stance on production levels, telling the visiting secretary-general of the Organization of Petroleum Exporting Countries that market stability was a common interest.

USA crude traded between $44.55 and $45.58 before finishing 67 cents higher on the day at $45.50.

Traders said USA crude was supported by Genscape data showing a draw of some 700,000 barrels last week at the Cushing, Oklahoma, delivery hub for US crude futures.

The remarks by the minister, Bijan Namdar Zangeneh, came after talks with OPEC chief Mohammad Sanusi Barkindo on Tuesday in Tehran.

“Iran doesn’t plan to stop or cut oil output”, he added, according to another report. The bank left its Brent price estimates for the fourth quarter and for 2017 unchanged, while boosting those for WTI by 50 cents a barrel.