By Kevin Baxter
Oil prices fluctuated between positive and negative on Monday as investors debated the possibility of a production cut at this week's OPEC meeting.
The January contract for global crude benchmark Brent was up 0.02% at $48.25 a barrel while its U.S. counterpart, West Texas Intermediate, fell 0.07% at $46.03.
The oil price has whipsawed through much of the year on "will they or won't they" speculation over whether the Organization of the Petroleum Exporting Countries will strike a production deal. Ahead of this meeting, the cartel has still yet to form a consensus regarding production cuts, guaranteeing volatility for oil in the comingdays.
The price of oil dipped by 4% on Friday after Saudi Arabia canceled a meeting with Russia. Norbert Rücker, head of commodities research at Julius Baer, said that most analysts were growing tired of explaining every price move.
"Finally, this Wednesday's OPEC meeting should put an end to the back-and-forth of oil diplomacy," Mr. Rücker said in a research note. "Chances for a deal are high but we remain skeptical that it has teeth and see no lasting impact on prices."
Other market participants believe representatives from OPEC member states will now start to prepare the market for no deal, to avoid panic-selling on Wednesday.
If a deal is struck, it is likely to have a short shelf life due to OPEC's notoriously poor record of quota compliance and the fact that several sizable oil producers will be exempt from negotiations, said Bjarne Schieldrop, from Sweden's SEB bank.
The dollar could also play a role in keeping oil flowing.
Morgan Stanley said that the relative strength of the U.S. dollar has helped cushion the blow of low oil prices for countries with weaker currencies, particularly in Russia and Latin America. This gives countries less motivation to cut production. The bank's analysts are bullish on the greenback for 2017, meaning that some stalled oil projects could become feasible again next year.
Nymex reformulated gasoline blendstock futures--the benchmark gasoline contract--rose 0.59% to $1.38 a gallon, while diesel futures traded at $1.49, up 0.42%.
ICE gasoil futures changed hands at $431.75 a metric ton, down 0.17%.
Write to Kevin Baxter at Kevin.Baxter@wsj.com
(END) Dow Jones Newswires
November 28, 2016 06:51 ET (11:51 GMT)
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