Oil pared gains near a three-week high as Russia said that although it’s prepared to discuss output with the Organization of Petroleum Exporting Countries, no action is currently planned.
Futures traded up 0.9% in New York after earlier climbing 2.7%, as Russian Energy Minister Alexander Novak said that while OPEC member Venezuela has proposed a meeting next month, nothing is scheduled. Four OPEC delegates also said yesterday that no gathering has been arranged. Iraq said earlier in the week that Saudi Arabia and Russia had become more flexible about cooperating to reduce output.
“Talk of an OPEC cut is likely no more than an attempt to shift market sentiment,” Barclays Plc analysts Miswin Mahesh and Michael Cohen said in a report. “We remain highly skeptical that such a meeting will result in credible cuts in supply.”
Oil has pared its decline this year to about 9% after earlier plunging to a 12-year low as volatility in global markets added to concern over brimming U.S. stockpiles and rising exports from Iran after the removal of sanctions. The head of OPEC this week called on producers outside the group to assist in reducing the global oversupply, signaling once again its members won’t make output cuts alone.
West Texas Intermediate for March delivery gained as much as 91 cents to $34.13/bbl on the New York Mercantile Exchange and was at $33.51 as of 9:44 a.m. in London. The contract climbed 92 cents to $33.22 on Thursday, the highest close since Jan. 7. Total volume traded was about 53% above the 100-day average. Prices are up 4.1% this week.
Brent for March settlement, which expires Friday, rose as much as 96 cents, or 2.8%, to $34.85/bbl on the London-based ICE Futures Europe exchange. Prices are up 6.9% this week. The European benchmark crude was at a premium of 72 cents to WTI. The more-active April contract climbed 30 cents to $35.10.
Russia hasn’t begun internal discussions on how any production cuts would be implemented, Novak said in an interview with Bloomberg Television, adding that a reduction is only possible if all exporters agree to participate.
Four OPEC representatives, who asked not to be identified, said they hadn’t heard of any plan for talks. One Gulf member said de facto leader Saudi Arabia had no proposal to trim production by as much as 5%, after Interfax reported Thursday the country had suggested such a cut at previous OPEC meetings, citing Novak. The minister said Russia would be willing to discuss output with OPEC, according to the news service.
Saudi Arabia is keen to defend market share and Russia’s inability to cut production in winter months makes coordination difficult. Until this week, Russia had repeatedly stated its goal of keeping oil production stable even as prices tumble. The two countries’ opposing views on Syria, where Russia is President Bashar Al-Assad’s closest ally and Saudi Arabia seeks his removal, present another diplomatic obstacle.