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[SYDNEY] Oil traded near US$46 amid skepticism over the Organization of Petroleum Exporting Countries' (Opec) ability to reach an agreement to cut output and as representatives prepare to meet Monday amid last-minute negotiations over the deal the group aims to formalise Wednesday.
Futures were little changed in New York after earlier falling as much as two per cent. Saudi Arabia for the first time on Sunday suggested Opec doesn't necessarily need to curb output and pulled out of a scheduled meeting with non-member producers, including Russia.
Opec will hold an internal meeting in Vienna Monday to resolve its differences, and as part of the final push to reach an agreement, oil ministers from Algeria and Venezuela are heading to Moscow to get the group's biggest rival on board.
Opec is heading into the final stretch before its Nov 30 meeting to adopt a deal first floated in September to collectively reduce output. Saudi Arabia, the group's de facto leader, is seeking to reverse the pump-at-will policy it supported in 2014 and is now pushing members to agree how they will individually shoulder the first production cuts in eight years. Saudi oil minister Khalid Al-Falih said the oil market will recover in 2017 even without cuts.
"The market is currently quite pressured by the uncertainties raised from various reports, including Saudi Arabia pulling out of Monday's talks with non-Opec nations," Seo Sang Young, a Seoul-based market strategist at Kiwoom Securities Co, said by phone.
"It's also highly suspicious whether Opec will keep its promises even if it achieves an accord because the members are constantly raising production."
West Texas Intermediate (WTI) for January delivery was at US$45.99 a barrel on the New York Mercantile Exchange. down seven US cents at 11.44 am in Seoul. Prices lost US$1.90, or four per cent, to US$46.06 a barrel on Friday. Total volume traded was more than double the 100-day average.
Brent for January settlement was at US$47.20 a barrel on the London-based ICE Futures Europe exchange, down four US cents. The contract dropped US$1.76, or 3.6 per cent, to US$47.24 a barrel on Friday. The global benchmark traded at a US$1.20 premium to WTI.
Algeria's Energy Minister Noureddine Boutarfa, architect of the group's preliminary agreement reached in Algiers, will travel Monday to Moscow with his Venezuelan counterpart before meeting Iraq's oil minister Tuesday in Vienna, according to two Opec delegates with knowledge of the plan.
He presented a proposal Saturday to Iranian Oil Minister Bijan Namdar Zanganeh for an output cut of 1.1 million barrels a day for Opec and 600,000 barrels a day for non-member countries.