Oil held steady yesterday, as the world's largest producers gathered in Algeria to discuss ways to support the market, although scepticism about any deal being reached has prompted money managers to cut their bullish bets to a one-month low.
Price fell by nearly five percent last week, dented by signs Saudi Arabia and Iran were making little progress in achieving a preliminary agreement to freeze production.
Members of the Organization of the Petroleum Exporting Countries are meeting informally on the sidelines of the International Energy Forum in Algeria from Sept. 26-28, where they will discuss a possible deal to limit output.
"We will not come out of the meeting empty-handed," Algerian energy minister Noureddine Bouterfa said in Algiers on Sunday.
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However, Amin Nasser, chief executive of Saudi Aramco, warned the oil market is still weak and will remain volatile in the near future.
Brent crude futures LCOc1 were down 2 cents on the day at $45.87 a barrel by 0900 GMT, while U.S. crude prices CLc1 were up 7 cents at US$44.55 a barrel.
Unplanned outages across OPEC countries still amount to around 2 million barrels per day, according to SEB commodities strategist Bjarne Schieldrop, which will make it difficult for members that are pumping close to capacity to make way for the potential return of that shuttered output.
"They will come away with nothing, because it is too difficult. How can they decide a freeze when Libya is on the doorstep of returning production, or Nigeria for that matter?" Schieldrop said.
Data from the U.S. Commodity Futures Trading Commission on Friday showed hedge fund managers cut their net long position in crude oil to its lowest in a month, having made the largest weekly addition to their short positions on record. [CFTC/]
Sources told Reuters last week that Saudi Arabia did not expect a decision to be made in Algeria, while Saudi Arabia had offered to reduce production if Iran caps its own output this year, an offer to which Tehran had yet to respond.
"I expect Algeria and Venezuela to keep pushing for a deal - it's imperative for them to keep the price up," Barratt said.