Oil is poised for the biggest monthly advance since April as the global surplus diminishes and OPEC’s planned talks fan speculation it could reach an accord on output.
Futures slid 0.6 percent in New York, trimming the monthly gain to 11 percent. Iraq’s Prime Minister Haidar Al-Abadi said Tuesday the country would support a proposal among major producers to freeze output. Prices on Wednesday were capped by a report that U.S. crude stockpiles increased by 942,000 barrels last week, according to the industry-funded American Petroleum Institute.
“The market is rebalancing,” Michael Cohen and Miswin Mahesh, analysts at Barclays Plc, wrote in a report. “A constructive oil-market balance is emerging for the fourth quarter and 2017.”
West Texas Intermediate for October delivery was at $46.06 a barrel on the New York Mercantile Exchange, down 29 cents, at 11:49 a.m. London time. The contract declined 63 cents to settle at $46.35 on Tuesday. Total volume traded Wednesday was about 36 percent below the 100-day average.
Brent for October settlement, which expires Wednesday, was down 37 cents at $48 a barrel on the London-based ICE Futures Europe exchange, trading at a $1.87 premium to WTI. The global benchmark crude dropped 1.8 percent on Tuesday. The more-active November contract fell 48 cents to $48.25 a barrel.
Oil is still trading at half its level two years ago. The prolonged decline is hurting Iraq, Al-Abadi said in Baghdad, pledging to support a potential output freeze deal. The nation is the second-biggest member of OPEC, pumping 4.36 million barrels a day in July, according to data compiled by Bloomberg. Saudi Arabia is the largest, producing 10.43 million a day.