Oil falls in volatile trade ahead of key oil producer meeting

Fri Feb 5, 2016 5:47pm EST
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By Devika Krishna Kumar

NEW YORK (Reuters) - Oil prices ended the week lower in choppy trading on Friday, snapping two weeks of gains, as a frenzy of speculation about a possible deal between top oil producers clashed with concerns about a growing supply glut.

After a volatile week's trading, much is riding on Sunday's meeting between Venezuelan Oil Minister Eulogio Del Pino and his Saudi counterpart Ali al-Naimi in Riyadh, after Del Pino's discussions with the Qatari and Omani ministers this week.

As cash-strapped Venezuela tries to rally support for concerted action between members of the Organization of the Petroleum Exporting Countries to boost prices, Sunday's meeting is seen "make or break" for a possible deal, said Tim Evans, energy futures specialist at Citi Futures.

Adding to this week's rollercoaster ride in prices was the sudden liquidation of a $600 million leveraged fund bet on falling prices.

Investors were also weighing a string of conflicting indicators on Friday as the dollar .DXY recovered some of the ground lost over the past two days while investors continued to fret about growing oversupply, with U.S. inventories hitting record highs last week amid concerns about a slowing global economy.

The pickup in the market earlier this week was not really warranted, Gene McGillian, senior analyst at Tradition Energy said, referring to the market seemingly brushing aside extremely bearish inventory data earlier this week. [EIA/S]

"Today when the dollar tried to push up, which I attribute mostly to a little weekend covering, you started to see some sellers come back in the oil markets," he said.

Global benchmark Brent crude futures LCOc1 settled down 40 cents, or 1.2 percent at $34.06 a barrel, after trading between $35.14 and $33.81.   Continued...

Pump jacks are seen at the Lukoil company owned Imilorskoye oil field, as the sun sets, outside the West Siberian city of Kogalym, Russia, January 25, 2016. Picture taken January 25, 2016. REUTERS/Sergei Karpukhin