Oil prices recovered on Monday, November 28, adding more than 2 percent in volatile trading after falling as much as 2 percent in previous trading session.
The gains on Monday came as market reacted to the uncertain prospects of major producers being able to agree output cuts at a meeting on Wednesday, November 30.
Brent crude LCOc1 rose 98 cents to $48.22 a barrel, a 2.1 percent gain. While U.S. West Texas Intermediate crude futures CLc1 rose 99 cents to $47.05 a barrel, a 2.2 percent gain by 10:44 a.m. ET, Reuters reports.
Trading turned choppy after prices crashed more than 3 percent on Friday, November 25, as doubts grew over whether the Organisation of the Petroleum Exporting Countries, OPEC, would reach agreement to help curb a global supply overhang that has more than halved prices since 2014.
Market watchers expected prices to remain volatile until OPEC’s Wednesday meeting offers the market a definitive answer as to whether OPEC and non-OPEC producers can agree cuts.
“Through Wednesday, trade will be very headline-driven,” said Tony Headrick of CHS Hedging. “Comments coming out of pre-meetings, particularly from Iraq this morning, are really a driver today.”
On Sunday, Saudi Arabian Energy Minister Khalid al-Falih said the oil market would balance itself in 2017 even if producers did not intervene, and that keeping output at current levels could therefore be justified.
By Monday, OPEC was scrambling to rescue the deal, with analysts warning of a sharp price correction if they fail, and prices spiked as Iraq’s oil minister said the country would cooperate with the group to reach an agreement “acceptable to all”.
A meeting scheduled for Monday between OPEC and non-OPEC producers was called off after Saudi Arabia declined to attend, while concerns over the feasibility of a deal pushed the crude oil volatility index .OVX close to a nine-month high.
Others warned that even if some form of an output restriction is announced after producers meet in Vienna on Wednesday, the details matter greatly.
