NEW YORK (Reuters) - Oil prices were largely steady on Monday, rebounding from three-month lows, on a report saying that OPEC members were seeking to resolve their differences on a deal to cut production ahead of a meeting later this month.
OPEC kingpin Saudi Arabia and fellow exporters Iran and Iraq have been at odds over how to rein in supply to reduce a glut in global markets. The lack of agreement within the Organization of the Petroleum Exporting Countries following a tentative deal in September has put pressure on benchmark prices.
Qatar, Algeria and Venezuela were leading the push to overcome the divide between the group's biggest producers ahead of an output policy meeting on Nov. 30 in Vienna, according to a Bloomberg report. (bloom.bg/2eTLwNI)
Saudi Arabia, Iraq and Iran are still at odds over how to share output cuts, the report said.
Saudi Energy Minister Khalid al-Falih said it was imperative for OPEC to reach a consensus on activating the deal made in September in Algiers to cut production, according to Algeria’s state news agency APS on Sunday.
Brent crude futures LCOc1 settled at $44.43 per barrel, down 0.72 percent, after falling to as low as $43.57. U.S. crude CLc1 ended the session down 0.2 percent at $43.32, after hitting a low of $42.20. Both benchmarks’ session lows were the weakest since Aug. 11.
“Record OPEC production clearly has the market nervous about a potential deal, but we believe that most OPEC producers are already producing flat out as much as they can,” said Michael Tran, director of energy strategy at RBC Capital Markets in New York.
“The current aggressive push in production is to be expected given that each producing country is trying to position itself ahead of the meeting later this month.”
OPEC said on Friday its output hit a record 33.64 million barrels per day in October, and forecast an even larger global surplus in 2017 than the International Energy Agency. [IEA/M]
The risk of U.S. production growth in the event OPEC cannot reach a deal is also a factor weighing on crude markets, given that producers hedged aggressively last month when prices spiked north of $50, RBC’s Tran said.
U.S. shale producers are redeploying cash, rigs and workers, cautiously confident the energy sector has turned a corner after Donald Trump’s U.S. presidential election victory and OPEC’s recent signal that it plans to curb production.
Trump’s surprise win in last week’s election boosted the dollar and stocks but undermined oil.
“In our view the oil market has not yet attempted to fully factor a Trump presidency into prices,” Standard Chartered said in a note.
“We think that market views on the effect of a Trump presidency on oil have yet to firm up, beyond perhaps a loosely defined feeling that Trump might provide a further boost for the U.S. dollar and for the prospects of U.S. shale oil.”
In advance of the election, speculators including hedge funds and money managers cut their net long U.S. crude futures and options positions in the week to Nov. 8 to the lowest since Sept. 25, the U.S. Commodity Futures Trading Commission (CFTC) said. [CFTC/]
Additional reporting Scott DiSavino in New York, Amanda Cooper in London and Osamu Tsukimori in Tokyo; Editing by Marguerita Choy