Published: Tue, September 27, 2016
Economy | By Melissa Porter

Oil prices rebound after Algeria says all options open at OPEC meeting

Crude prices rebounded on Monday after Algeria's energy minister said the day before that all options were possible for an oil output cut or freeze at this week's informal meeting of OPEC producers. Both contracts booked solid gains over the previous two days-WTI surged 6.6 percent and Brent gained 3.9 percent-on data showing United States commercial inventories fell more than six million barrels last week, indicating strong strong demand in the world's top oil consumer. Officials from Saudi Arabia and Iran, whose rivalry derailed an oil-supply accord earlier this year, have yet to reach an agreement, a person who was briefed on the discussions said. The price for Brent crude oil moved up by 1.9 percent to start trading in NY at $46.79 per barrel.

Oil markets fell on Friday as hopes for a comprehensive deal in Algeria faded.

"Given that OPEC has failed to agree much of anything in the last 12 months, it seems unlikely that it will start now", Michael Hewson, chief market analyst at CMC Markets UK, told the BBC.

The OPEC members pump up 33.4 million barrels per day, which is a very high level that would never help push prices to hike, said Algerian Energy Minister Noureddine Bouterfa.

Aside from the informal talks being held this week, in the absence of an emergency meeting the next official OPEC meeting would be in November.

Behind the scenes, OPEC experts are trying to work out last-minute details for an output-limiting deal that would impress the market but also allow oil ministers to claim victories at home in front of their respective domestic audiences.

Financial markets rallied around the world as the dollar weakened after the Federal Reserve left interest rates unchanged Wednesday and scaled back its projections for future hikes. Support came from data showing USA commercial inventories fell more than six million barrels last week, suggesting stronger demand in the world's top oil-consuming country. The U.N. estimates that more than 3 million people have been forced from their homes since IS swept across northern and western Iraq in 2014, capturing the country's second largest city, Mosul.

Sentiment was bolstered following a surprise 6.2 million barrel draw on USA oil reserves last week, revealed by watchdog the Energy Information Administration.

A source familiar with Saudi oil thinking said: "Our goal is to reach a consensus and look at different scenarios for the production levels of the OPEC countries". Several members, such as Venezuela, have talked up the chances of an output cap being agreed.

Futures dropped as much as 3.2 percent in NY. "We see potential for knee-jerk tests of $50 for oil prices".

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