A view of an oil refinery off the coast of Singapore 14 March 2008
Singapore (Reuters): Oil prices fell on Friday, pulled down by a sell-off following two sessions of strong rises and on caution ahead of a gathering of OPEC ministers next week in Algeria to discuss possible production cooperation to rein in global oversupply.
US West Texas Intermediate (WTI) crude oil futures were trading at $45.98 per barrel at 0648 GMT (2:48 am ET), down 34 cents, or 0.7%, from their previous close.
International Brent crude oil futures were down 25 cents, or 0.5%, at $47.40 a barrel.
Traders said that the declines were largely down to technical indicators and also selling pressure following strong price gains in the previous two trading sessions.
Matt Stanley, a fuel broker at Freight Investor Services in Dubai, said that there was a lot of uncertainty in the market regarding price trends.
“Nobody is really sure where we will go from here which strikes me that $47.50 is a number we may hover around for a while,” he said.
The price falls may also be related to an increase in crude supplies, with global production already exceeding consumption almost without interruption since mid-2014.
War-torn Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), exported its first cargo from its Ras Lanuf port since at least 2014 this week, contributing to OPEC’s record production of 33.5 million barrels.
“Supply has increased again,” said London-based commodity brokerage Marex Spectron, adding that at the same time “a significant amount of refining capacity is out of the market, which puts a lid on the demand for crude oil.”
OPEC could see a new push to clinch a first deal to curb output since 2008 next week when the group meets informally in Algeria next week.
Although most market observers say an agreement that would significantly cut record output is unlikely, analysts said that some form of cooperation among exporters, which could at least prevent production from ballooning further, was possible.
ANZ bank said on Friday that it did not expect a formal deal, but added that “discussions between Saudi Arabia and Iran this week suggest they are keen to get something done..., which raises the possibility of a sharp reaction to the upside in prices if an agreement is reached.”