Oil pares losses on eve of Opec Vienna talks

Oil traded near $49 a barrel in New York, yesterday, as Opec ministers arrived in Vienna for talks after prices rebounded from 12-year lows.

West Texas Intermediate fluctuated after rising 6.9% in May as supply was curbed by fires in Canada and militant attacks in Nigeria.

Crude pared losses amid conciliatory noises from Saudi Arabia, including the possibility of a reintroduction of an overall production target for the Opec members.

There is no indication that the kingdom is seeking to alter current production volumes.

Brent crude futures pared losses, dropping 14c to $49.75 a barrel in London.

Saudi Arabia will use this week’s meeting to repair relationships with fellow producers after the failure of an April accord to freeze crude output in Doha.

Saudi’s energy minister Khalid Al-Falih will reassure other members his nation won’t flood the oil market and may be open to the reintroduction of a production target for the group.

“Nobody thought they would do anything this week, so the introduction of a target is a big deal,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.

“The introduction of a quota would be the first time in a year and a half that they have done anything that hints at production restraint.”

Opec will probably stick to its policy of squeezing out rivals by maintaining production as the price rally helps justify the group’s strategy, according to analysts.