Futures gained as much as 2.8% in London and 1.8% in New York. Opec ministers have stepped up their diplomatic visits before the group’s November 27 meeting, potentially seeking a consensus on how to react to oil prices that have plunged to a four-year low.
Prices may slide further in the coming months as the market enters a period of weaker demand, the International Energy Agency said yesterday.
Oil has collapsed into a bear market after leading members of Opec resisted calls to cut production and the US shale boom lifted output to the highest level in three decades. Brent is heading for its eighth weekly decline, the longest retreat since the contract began trading in 1988.
“Brent falling below $80 yesterday and WTI falling below $74 has certainly gotten the attention of Opec,” said John Kilduff of Again Capital in New York.
“We’re watching them descend into panic mode, rushing from capital to capital in search of an agreement. They may cobble together something before the meeting but I’m still sceptical that they will.”
Libya Prime Minister Abdullah al-Thani flew to Riyadh yesterday just as Iraq President Fouad Masoum left the kingdom after a two-day visit where he met with King Abdullah.
Rafael Ramirez, Venezuela’s foreign minister and representative to Opec, held talks in Algeria and Qatar. Saudi Arabia oil minister Ali Al-Naimi toured Latin America.
Saudi Arabia, the world’s biggest oil exporter, is trying to build consensus among fellow Opec members before they meet on November 27 in Vienna.
Supply-demand balances suggest that the price rout has yet to run its course, the International Energy Agency said in its monthly report.
“Downward price pressures could build further in the first half of 2015. Pressure on Opec to reduce production is building,” it said.
The 12-member group would need to reduce production by between 1m and 1.5m barrels a day to shake off the negative sentiment in the market, BNP Paribas said yesterday.
“This looks a lot like what happened when prices first slipped below $80,” said Stephen Schork of Schork Group. “You saw it rebound a bit before it took another leg lower. I see no reason that this time will be different.”
Russia is preparing for a “catastrophic” slump in oil prices, which it can weather thanks to a cushion of more than $400bn in reserves, President Vladimir Putin said.