Oil falls as Iran and Iraq shy away from output freeze
Oil turned negative in volatile trading on Tuesday due to worries that Iran and Iraq were not ready to agree on an OPEC output freeze. Prices earlier this month rose to their highest level on reports cartel members had overcome their internal disputes.
Analysts said the market would remain sensitive to comments from officials attending a technical meeting of the Organization of the Petroleum Exporting Countries (OPEC), which was trying to hammer out the details of an agreement before the formal meeting on November 30.
Brent futures were down 41 cents, or 0.8pc, at $48.49 a barrel at 12:34pm in New York.
Prices slumped after OPEC sources said agreement to a 4pc to 4.5pc output cut by all 14 members aside from Libya and Nigeria would still hinge next week on the backing of Iran and Iraq.
"The hope was OPEC would have an announcement on a production cut on Tuesday and they don't have one yet," said Phil Flynn, analyst at Chicago-based brokerage Price Futures Group, noting there were reports the cartel would defer a decision on a deal until the November 30 meeting due to the opposition of Iran and Iraq.
Prices on Tuesday were initially boosted by comments from a Nigerian official attending the OPEC technical meeting, who said that it was likely all countries would be "on board" by the end of the day.
OPEC is trying to bring its members and non-OPEC producer Russia to agree on a coordinated cut to prop up the market, beset by a two-year glut in supplies, by bringing production into line with consumption. US commercial crude oil inventories were forecast to rise for a fourth consecutive week. (Reuters)