June 1, 2016 / 1:02 AM / a year ago

Oil down, declines cut by report OPEC mulling output cap

NEW YORK (Reuters) - Oil settled down on Wednesday on technical resistance at around the $50 a barrel mark, with the market retracing most earlier declines after OPEC sources said the group will likely consider a production curb at its forthcoming meeting.

An oil pump jack can be seen in Cisco, Texas, August 23, 2015. REUTERS/Mike Stone

Prices briefly slipped further after settlement when an industry group said its weekly data showed a surprise build in U.S. crude inventories and Iran’s oil minister called for OPEC to adopt the radical idea of production quotas for individual member countries instead of for the group as a whole. Later, prices recovered to about where they settled.

Reuters cited four OPEC sources as saying the Organization of the Petroleum Exporting Countries was likely to discuss an output ceiling at its meeting in Vienna on Thursday. Three sources said the ceiling needs to be set substantially above 30 million barrels per day and lengthy discussions may be required.

But later, Iran’s Oil Minister Bijan Zanganeh disagreed.

“An output ceiling has no benefit to us,” Zanganeh told reporters. Iran has steadfastly maintained that it will not curb its oil exports until they reach pre-sanction levels.

OPEC failed to agree on a group production quota for the first time in years at its December meeting. It also could not agree to an output freeze at an April meeting in Doha, Qatar, after Saudi Arabia insisted Iran join the plan.

Market participants doubted any quotas will be agreed upon at Thursday’s meeting.

But during the trading session, the possibility of production quotas returning to OPEC helped crude oil prices bounce off session lows.

U.S. crude’s West Texas Intermediate (WTI) futures CLc1 settled down 9 cents at $49.01 a barrel, off a session low of $47.75.

Brent futures LCOc1 fell 17 cents to settle at $49.72, after plumbing $48.65 earlier. The session high was $50.

After settlement, industry group American Petroleum Institute reported a surprise build of nearly 2.4 million barrels in U.S. crude stockpiles last week, versus analysts expectations for a 2.5 million-barrel draw. The U.S. government releases official inventory data on Thursday. [API/S] [EIA/S]

Additional reporting by Henning Gloystein in Singapore; Editing by David Gregorio and Steve Orlofsky

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