Oil futures finished higher on Friday, with prices recovering some losses in the wake of a four-session decline, but losing almost 5% for the week as a glut of supplies showed no real signs of abating.
Expectations that the Organization of the Petroleum Exporting Countries will hold a “technical meeting” next week, ahead of its official summit in December, offered a glimmer of hope that the oil-producer group will take some sort of action to alleviate the market’s oversupply.
November West Texas Intermediate crude CLX5, -0.17% settled at $47.26 a barrel, up 88 cents, or 1.9%, on the New York Mercantile Exchange. It settled at a nearly two-week low on Thursday and saw a loss of roughly 4.8% on the week.
December Brent crude LCOZ5, -0.16% on London’s ICE Futures exchange rose 73 cents, or 1.5%, to $50.46 a barrel, with prices down more than 4% for the week.
“I think the battle is to get Brent prices to hold on to the $60 per barrel level since, under current conditions, even this has proven to be impossible,” said Richard Hastings, macro strategist at Seaport Global Securities. Prices for both Brent and WTI have been trading above $50 on and off in recent days after a string of oil executives and OPEC leaders last week hinted that a price recovery was on its way.
“The situation remains quite difficult, and oversupply and imbalances are becoming severely systemic, terribly intricate and difficult to resolve,” said Hastings. “A return to any type of oil market equilibrium looks increasingly evasive at this point.”
Meanwhile, traders looked ahead to a special OPEC. Venezuela’s president has said the meeting will be held Wednesday and will include OPEC and non-OPEC members. A recent Reuters report said OPEC member Venezuela has plans to resurrect the group’s old price-band mechanism.
The plan, according to Reuters, which cited comments from former Venezuelan Oil Minister Rafael Ramirez, includes progressive production cuts to control prices, with a “first floor” of $70 per barrel and later a target of $100 per barrel.
The oil market had been talking about a potential OPEC meeting this month for weeks, with non-OPEC Russia said to be willing to attend.
Some traders will be looking for “signs that OPEC may be ready to change course,” said Tim Evans, energy analyst at Citi Futures. “We do see some potential for a shift in policy, but would focus on the December 4 OPEC summit rather than next week’s meeting.”
