The commodity rallied for seven straight sessions and entered a bull market — a 20 percent rise from recent lows — last week after OPEC and Russia announced plans to discuss the supply crisis, which has hammered the crude market for more than two years.
Prices have taken a beating this week on concerns about the chances of success at the Algeria meeting, but they turned higher Thursday when Iran said it would join in, clearing up days of uncertainty over its attendance.
However, OPEC kingpin Saudi Arabia’s energy minister Khalid Al-Falih revived worries about the success of the gathering.
In an interview, he told Bloomberg News: “I don’t believe that an intervention of significance is required. I certainly don’t advocate a cut.”
But he added that a “freeze signifies that everybody is content with where the market is today and they want it to be trending in that direction”.
At about 0630 GMT, the US benchmark West Texas Intermediate for October delivery was down 11 cents at $47.22, while North Sea Brent was down 20 cents at $49.47.
A previous OPEC attempt to freeze output collapsed in April largely because of Iran’s refusal to join talks, having just emerged from international sanctions and keen to maximise its oil revenues.
However, even if a deal is reached in Algeria, there are doubts about the impact a production cap may have on an already oversupplied market.
“Most of the OPEC countries are sending a signal that they’re open to freezing production, but you have to remember that most of them are producing at peak levels,” BMI Research oil and gas analyst Peter Lee told AFP.
“Even if producers come to an agreement, the freeze is at a very high level.”
Lee added that he is “personally quite sceptical” about whether producers can come to an agreement in Algiers.
“It’s not just the matter of a production freeze or a cap, but there are geopolitical concerns involved too, especially when it comes to Iran and Saudi Arabia,” he said.