It was the turn of the optimists in the oil market to drive sentiment overnight, so crude prices rose by more than 3%, recouping most of the losses sustained on Friday, when hopes for an output deal in Algeria this week faded.
One OPEC delegate said the focus was now firmly on trying to persuade Iran to freeze output at levels acceptable for the rest of the producer group.
But Iran downplayed the chances of OPEC and non-OPEC oil producers clinching an output-restraint deal in Algeria even though several other members of the group said they still hoped for steps to tackle the oversupply of crude.
Despite those comments to Reuters, prices still rose.
November West Texas Intermediate crude climbed $US1.45, or 3.3%, to settle at $US45.93 a barrel in New York, after losing about 4% in Friday’s session.
In London, November Brent crude rose $US1.46, or 3.2%, to $US47.35 a barrel. Algeria’s Energy Minister Noureddine Boutarfa said in an interview with Bloomberg that the most important thing is to stabilise the oil market. He also said that several scenarios will be studied, including scenarios for an output cut and a freeze.
“Whichever way you slice it, OPEC has to cut production or else the market will not draw down the overhang accumulated over 2014 and 2015 even next year,” said consultancy Energy Aspects, quoted by Marketwatch.
Sources told Reuters last week that Saudi Arabia had offered to reduce its output if Iran agreed to freeze production, a shift in Riyadh’s position as the kingdom had previously refused to discuss output cuts.
As delegations gathered in Algiers, Iranian Oil Minister Bijan Zanganeh said expectations should be modest.
“This is an advisory meeting and that’s all we should expect from it," he was quoted as saying by oil ministry news service SHANA before he left Tehran. “the talks among OPEC members can be used for the OPEC summit in Vienna in November."
Iran’s output has been steady at 3.6 million barrels per day (bpd) in the past three months, close to what the country produced before the imposition of European sanctions in 2012.
The sanctions were eased in January 2016, and Iran has said it wants to achieve output of more than 4 million bpd.
"For us in the UAE, we are for a decision. We think a freeze will help if it is agreed. We hope that all are going to agree,” the United Arab Emirates’ energy minister, Suhail bin Mohammed al-Mazroui, told Reuters.
