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[CALGARY] Oil traded near US$48 a barrel as Opec negotiators worked to convince Iran and non-member Russia to cut output after Iraq's prime minister signaled his country will curtail production.
Futures were little changed in New York. Algeria's Energy Minister Noureddine Boutarfa will travel to Tehran on Saturday in an effort to bring a deal closer, said a person familiar with the matter. Opec ministers scheduled a breakfast with non members including Russia prior to the group's Nov 30 summit, two people said.
Iraq will participate in a deal to shrink production, Prime Minister Haider Al-Abadi said, reversing his country's previous opposition and calling for total Opec cuts of 900,000 barrels a day.
"At the end of the day, we are probably going to get about a million barrels a day of cuts from Opec and that's going to drive the market into deficit," Bart Melek, the head of commodity strategy at TD Securities in Toronto, said by phone from Toronto. "We are seeing communications from Iraq that they would be happy to participate."
West Texas Intermediate futures for January delivery gained 2 cents to US$47.98 a barrel on the New York Mercantile Exchange at the 1pm halt to trading. There was no settlement because of the Thanksgiving holiday in the US. The contract had slipped 7 cents on Wednesday after gaining US$2.61 the previous three sessions. Total volume traded was 82 per cent below the 100-day average.
Brent for January settlement rose 5 cents to US$49 on the London-based ICE Futures Europe exchange. The global benchmark crude fell 17 cents to US$48.95 on Wednesday.
Iran, Opec's third-largest producer, is insisting it should be allowed to keep increasing output to pre-sanctions levels of about 4 million barrels a day.
Russia's offer to freeze production at record levels - if Opec does a deal - isn't good enough for some members who are asking for a cut. Opec has asked non-Opec producers to trim supplies by about 500,000 barrels a day, Energy Minister Alexander Novak said.
Iraq, Opec's largest producer behind Saudi Arabia, will shoulder part of the burden of oil-output cuts, Al-Abadi said in Baghdad on Wednesday. The nation had previously demanded an exemption, citing the urgency of its offensive against Islamic State.
In Russia, a freeze at current production levels would still equate to a cutback of 200,000 to 300,000 barrels a day from its 2017 plan, Novak said in Moscow. Russia, Azerbaijan, Kazakhstan and Oman are the only producers outside Opec that have said they're ready to act together, and an Opec accord is unlikely unless more countries take part, Azerbaijan Energy Minister Natiq Aliyev said.
Opec's Economic Commission Board, which makes recommendations for the ministerial meeting next week, concluded that members should cut production by about 1 million barrels a day and non members should reduced output by 500,000 barrels a day, a delegate said.
If Opec cuts and oil rises toward US$60 a barrel, there may be a significant increase in output from other countries including the US, International Energy Agency Executive Director Fatih Birol said on Bloomberg Television.
Nigeria, exempt from an Opec deal, is optimistic the group can reach a consensus when members meet next week, Minister of State for Petroleum Emmanuel Kachikwu said on Bloomberg Television.
US crude stockpiles shrank by 1.26 million barrels last week, Energy Information Administration data showed, the first decline in four weeks. Analysts surveyed by Bloomberg had forecast a 1 million-barrel gain.