Oil prices fell on Friday in thin trade as analysts said a weekend meeting of major oil exporters would do little to help clear global oversupply quickly even though it would provide a floor for the market.
Oil producers, led by top exporters Saudi Arabia and Russia, will meet in Qatar on Sunday to discuss freezing output around current levels in an effort to contain a glut that sees some 1.5 million barrels of crude produced every day in excess of demand, Reuters reported. It would be the first joint action by major OPEC and non-OPEC producers in 15 years although Iran has refused to participate, saying it wants to rebuild its output to pre-sanctions levels.
“Momentum is building behind an agreement that likely excludes Iran (and potentially Libya). While there will likely be little effect on the physical market an agreement would represent an important psychological shift in setting oil prices,” investment bank Jefferies said on Friday.
Brent crude was at $42.77 a barrel, down $1.07 from their Thursday close. US West Texas Intermediate (WTI) futures were also down $1.05 cents, trading at $40.45.
Despite discussions among producers focusing on freezing output rather than cutting it, most analysts said they had little hope for a Doha deal that reduces the global oversupply. The glut has pulled down crude prices by as much as 70% since mid-2014. “The Doha meeting does not materially change the oil market balances,” Barclays bank said. “If recent supply-side fundamental support holds and the market’s expectations for a credible statement and commitment are met, the meeting could help prevent prices from falling back to the low $30 range.”
