London: Oil headed for a weekly gain after Saudi Arabia was said to have offered to reduce production if Iran agreed to freeze its output.
Futures were little changed after earlier declining as much as 1.9 per cent in New York. The kingdom would be willing to reduce its output if Iran were to agree to freeze at its current production level of 3.6 million barrels a day, according to two people familiar with the situation who asked not be identified because the talks were private. The discussions between the two nations ended without agreement Thursday. Now is the right time for a deal, according to Falah Al-Amri, Iraq’s governor to Opec. Prices are unlikely to climb above $50 a barrel unless the group reduces production, he said.
West Texas Intermediate for November delivery was at $46.01 a barrel, 31 cents lower on the New York Mercantile Exchange at 2:14pm in London. The contract advanced 98 cents to $46.32 on Thursday, the highest close in two weeks. Total volume traded was about 50 per cent above the 100-day average. Prices are up 6.9 per cent this week.
Brent for November settlement fell 15 cents to $47.50 a barrel on the London-based ICE Futures Europe exchange after rising 1.8 per cent to $47.65 on Thursday. Prices are up 3.7 per cent this week. The global benchmark was at a $1.56 premium to WTI.
Oil has fluctuated since August’s rally on speculation the Organisation of Petroleum Exporting Countries and Russia will agree on ways to stabilise the market when they meet Sept. 28. While Venezuelan President Nicolas Maduro said members are close to a deal, all but two of 23 analysts surveyed by Bloomberg said an agreement to limit production is unlikely. Freezing output was proposed in February, but a meeting in April ended with no final accord.
“There is unlikely to be a voluntary limit to production,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “Such an agreement would be at odds with OPEC’s current strategy of defending its market shares.”
Saudi Arabia and Iran met at Opec headquarters in preparation for informal talks in Algiers, according to two people briefed on the discussions. Opec Secretary-General Mohammed Barkindo visited Qatar and Iran this month to build consensus before the gathering. Russian President Vladimir Putin said Sept. 2 that the producers can overcome their divisions to reach a deal.
