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reuters
new york, abu dhabi
Minister of Energy and Industry Dr Mohammed bin Saleh al Sada said on Wednesday that oil markets were showing a positive trend towards rebalancing as demand rises and production slows around the world.
Sada, who is also the current president of the OPEC conference, is expected in Vienna on Wednesday where the group will meet on Thursday.
The rebalancing of the market is"largely due to a rise in demand and the slowing down or outage of many production stations around the world, let alone the retreat in investments in the sector," the ministry said in a statement.
It said the agenda for Thursday's OPEC meeting includes the current global oil market, expected developments in production levels, supply and demand, investments in the oil sector and dialogue with non-OPEC producers.
Meanwhile, oil prices were down slightly on Wednesday, erasing most of the day's losses after OPEC sources said the group was likely to consider a new output ceiling at its forthcoming meeting.
Reuters cited four OPEC sources as saying the Organization of the Petroleum Exporting Countries was likely to consider a production cap at its Thursday meeting. Three sources said the ceiling needs to be set substantially above 30 million barrels per day, and lengthy discussions may be required.
If agreed, the decision would represent a major compromise for OPEC, which failed to agree on an output ceiling for the first time in years at its last meeting in December.
Many market participants remain doubtful there will be such a deal since Iran, a key OPEC member, is determined to restore crude exports to pre-sanction levels. Analysts instead expect OPEC members to focus on defending individual market share.
Still, the possibility of production quotas returning to OPEC helped oil prices shed most of the day's losses.
"If they get a quota in place, that would certainly be bullish for oil, given that no surprises were expected at all from this meeting," said Phil Flynn, analyst at the Price Futures Group in Chicago.
"It will also mark a diplomatic gesture by the Saudis after Doha," Flynn said. OPEC failed to agree to an output freeze at an April meeting in Doha, Qatar, after Saudi Arabia insisted Iran join the plan.
Brent was down 23 cents at $49.66 per barrel by 1:05 p.m. EDT (1705 GMT), off its session low of $48.65.
US crude's West Texas Intermediate (WTI) futures showed a 25 cent decline at $48.85, after plumbing $47.75.
Technical selling has also pressured oil, with stubborn resistance at around $50 a barrel. Brent and WTI rose to seven-month highs above $50 on Thursday before falling back into a $3-$5 trading range they had been in for weeks. Brent briefly touched $50 a barrel on Wednesday before falling back into negative territory.
The trading range has persisted since prices leaped $10 a barrel, or 20 percent, between early April and May, boosted by supply outages from Canada, Venezuela, Nigeria and Libya.
