The benchmark oil price pared back earlier gains today, after edging close to $50 a barrel.
Brent crude rose as high as $49.96 before losing around one per cent, or 51 cents, on the Monday’s close to reach $48.39 a barrel during early evening trading in London.
West Texas Intermediate crude, the US benchmark, slid 1.7 per cent, or 81 cents, to $47.43 a barrel.
Prices rallied around four per cent yesterday, on hopes that the Organisation of the Petroleum Exporting Countries (Opec) will cement a production cut when it meets in Vienna next Wednesday.
The black stuff received a boost this morning after comments from a Nigerian official attending an Opec technical meeting, which is trying to hammer out details of a production cut, that it was likely all countries would be “on board” by the end of Tuesday.
However, prices began falling after sources from Opec told Reuters that an agreement to a four or 4.5 per cent output cut for all of the consortium’s members, except Libya and Nigeria, would still hinge on gaining backing from Iran and Iraq.
Optimism has surged in the last week that the 14-member cartel and non-Opec member Russia will manage to strike a firm agreement that will cap production and stem the global supply glut that has flooded the market for two years, weighing on prices.
In September, Opec provisionally agreed to curb output to between 32.5m and 33m barrels per day (bpd). The group’s output reached 33.8m bpd in October.
“A growing number of oil analysts seem to agree with the markets that the Opec will be able to agree on some sort of a deal with Russia to curb crude production,” said Fawaz Razaqzada, market analyst at Forex.com.
“In addition, it is expected that the Opec will allow Iran to merely limit rather than cut its oil production, which increases the chances for an agreement to be reached.”
|What is Opec deciding?
|On 30 November, the 14-member consortium will attempt to hash out a final agreement that finalises the commitments made in the Algiers Accord, reached at the end of September, to tackle the global supply glut that depressing prices.
|In the provisional agreement, Opec members agreed to cut production to between 32.5m and 33m barrels per day (bpd). The group's level of production in October was 33.8m bpd, meaning it will need to cut production by over 1m bpd if it opts for the lower end of the indicated range.