Oil markets remain jittery ahead of OPEC meeting later in day

Last Updated: Wed, Nov 30, 2016 11:08 hrs
Gas flame is seen in the desert near the Khurais oilfield

Oil markets were jittery on Wednesday ahead of an OPEC meeting later in the day, with members of the producer cartel trying to thrash out an output cut to curb oversupply that has seen prices more than halve since 2014.

International Brent crude futures were trading at $46.55 per barrel at 0135 GMT, up 17 cents, or 0.37 percent from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $45.52 a barrel, up 29 percent or 0.64 percent from their last settlement.

Traders said that markets were nervous, and that prices could swing either way quickly depending on developments at the Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna.

"Traders should stay glued to their news tickers and not their charts for clues today," said Jeffrey Halley, senior market analyst at OANDA brokerage in Singapore.

Oil dropped nearly 4 percent the previous session over disputes between Saudi Arabia, Iran and Iraq regarding details of the planned cut.

Most analysts, including those at Goldman Sachs and Barclays, expect oil prices to quickly rise above $50 per barrel should OPEC come to an agreement. Without a deal, the consensus is for prices to fall towards $40 per barrel.

Iran and Iraq are resisting pressure from Saudi Arabia to curtail production, making it hard for the group to reach a deal.

On Tuesday, tensions rose after Iran wrote to OPEC saying it wanted Saudi Arabia to cut production by 1 million barrels per day (bpd), much more than Riyadh is willing to offer, OPEC sources who saw the letter told Reuters.

Iranian Oil Minister Bijan Zanganeh told reporters upon arrival at OPEC's headquarters in Vienna that his country was not prepared to reduce output: "We will leave the level of production (where) we decided in Algeria."

OPEC, which accounts for a third of global oil production, made a preliminary agreement in Algiers in September to cap output around 32.5-33 million bpd versus the current 33.64 million bpd to prop up prices.

OPEC said it would exempt Iran, Libya and Nigeria from cuts as their output had been crimped by unrest and sanctions.

A potential compromise would be for OPEC to return to some form of member state production quota, instead of ordering outright cuts.

Although that would do nothing to end a global production overhang in which more crude is pumped than can be consumed, it would potentially help balance the market in the long term as rising demand would gradually bring consumption to production levels.

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