Oil pares losses on Saudi offer to cut output as OPEC talks loom

Brent crude oil futures were down 17 cents at $47.48 a barrel, by 11:26 a.m. ET (1326 GMT).

U.S. West Texas Intermediate (WTI) crude oil futures were trading at $45.91 per barrel, down 41 cents.

Oil futures started the day in negative territory as investors held little hope of a breakthrough to prop up prices at talks held by members of the Organization of the Petroleum Exporting Countries in Algeria next week.

But the Saudi offer revives the notion, as signaled by Riyadh and Tehran earlier in the year, that they could coordinate to support the market.

If agreed, such a deal would shift Saudi Arabia’s strategy of defending its share of the global market, despite falling prices, at the expense of other producing countries, especially those where oil production is more expensive.

Market observers say a deal to freeze crude output across 14 OPEC members spanning Asia, the Middle East and the Americas is still unlikely. However, some sort of cooperation among exporters should prevent production from ballooning further.

ANZ bank said “discussions between Saudi Arabia and Iran this week suggest they are keen to get something done … which raises the possibility of a sharp reaction to the upside in prices if an agreement is reached.”

OPEC members will meet on the sidelines of the International Energy Forum, which groups producers and consumers, from Sept. 26-28. Non-OPEC producer Russia is also attending the forum.

Trader pointed to looming supply additions from Nigeria and Libya that could help cap prices in the near term.

This week, export plans for Nigeria’s Forcados crude oil emerged for the first time since a pipeline attack in February shut down the stream, while Libya exported its first cargo from the port of Ras Lanuf since 2014.

Both are adding to OPEC’s record production of 33.5 million barrels, and to global production that has exceeded consumption almost without interruption since mid-2014.

CNBC