Russia and members of the OPEC oil cartel led by Saudi Arabia will gather in Algeria for three days from Monday and are expected to discuss a stubborn oversupply that has depressed prices since 2014.
Traders are uncertain that a deal can be reached on maintaining current output levels or even cutting production, but reports that Saudi Arabia, Iran and Qatar met at the OPEC headquarters in Vienna have fuelled optimism.
An earlier Saudi-led attempt to freeze output fell apart in April after Iran refused to participate, saying it needed to raise production depleted by years of Western economic sanctions lifted only in January.
“A deal to freeze production should give oil prices a significant boost while if there is no deal then expect to see a big drop, at least in the short-term,” said Fawad Razaqzada, market analyst at Forex.com.
Around 1615 GMT, US benchmark West Texas Intermediate for delivery in November was down $1.43 at $44.93 a barrel compared with Thursday’s close.
Brent North Sea crude for November delivery shed $1.25 to $46.40 a barrel.
Both contracts rose over the week however after booking strong gains in the previous two sessions. WTI surged 6.6 per cent and Brent gained 3.9 per cent — on data showing US commercial inventories fell more than six million barrels last week, indicating stronger demand in the world’s top oil consuming country.
Price support early in the week meanwhile came from supply concerns surrounding OPEC members Libya and Nigeria.
Libyan effort to sharply boost exports was placed in doubt after fighters loyal to the UN-backed unity government were repelled in their attempt to retake control of eastern oil ports from rival forces.
Intensifying concerns over Nigeria, Africa’s biggest crude exporter, added to the supply backdrop.
A Nigerian militant group on Monday claimed an attack on a crude oil pipeline in southern Delta state, the second on the same line in less than a week.
Despite the week’s gains, oil prices have plunged from peaks of more than $100 a barrel in mid-2014 to near 13-year lows below $30 in February as supply outpaced demand.
Also supporting prices since has been a weaker greenback, which makes dollar-denominated crude cheaper for holders of rival currencies.
The dollar came under pressure this week after the Federal Reserve decided against raising US interest rates.
At the end of one of its most anticipated meetings for some time, the US central bank’s policymakers said that while the economy continued to improve and the argument for a rise was strengthening, more evidence of sustained progress was needed.
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