IRAN MIGHT COOPERATE
WSJ wrote, oil prices rose Tuesday, erasing early losses, on indications that Iran might cooperate with other global exporters as they explore ways to keep oil prices from falling.
Iran sent a letter to members of the Organization of the Petroleum Exporting Countries saying it would attend the group's informal talks in Algeria in September, OPEC delegates told The Wall Street Journal. An Iranian oil-ministry press official couldn't confirm the letter had been sent late Tuesday.
The 14-nation group is set to meet to discuss a deal to freeze production, and although Russia has also talked of cooperating, analysts are skeptical that any agreement can be reached.
"That Iran is willing to talk is another signal that progress could be made" in curbing robust global oil output, said Andy Lebow, senior partner at Commodity Research Group. "It removes some of the real dire downside risk" that oil prices could fall below $40 or even below $30 a barrel, as they did earlier this year.
Iran refused to participate in a potential deal to freeze production in April. The country has worked to increase its output since international sanctions were lifted earlier this year.
Many market watchers cautioned that a deal remains unlikely. Ahead of the meeting, OPEC members have an incentive to say things that could convince traders of a deal and send oil prices higher, said Ric Navy, senior vice president for energy futures at brokerage R.J. O'Brien & Associates LLC.
"You can't put any credence into any of these things," said Mr. Navy. But "any kind of a headline, even with no credibility behind it...it can set things off."
U.S. crude for October delivery settled up 69 cents, or 1.5%, at $48.10 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 80 cents, or 1.6%, to $49.96 a barrel on ICE Futures Europe.
Prices fell earlier in the session following reports over the weekend that Iraq could increase its crude exports and attacks on oil facilities in Nigeria could decline following an announced cease-fire.
In addition, investors are eyeing the U.S. oil patch, where producers have put new drilling rigs to work for eight straight weeks and estimated weekly production rose in the week ended Aug. 12 to the highest level since June. Some analysts warn that the recent rally in oil prices has been self-defeating because it will encourage new production while the global market remains oversupplied.
Goldman Sachs Group Inc. said in a note dated Monday and released to the media Tuesday that prices are likely to trade between $45 and $50 a barrel through next summer.
"The oil price recovery is tenuous," said the bank, which famously said last year that prices could fall as low as $20 a barrel before recovering. The U.S. oil price hit a low of $26.21 a barrel in February.
"A sustainable pickup in disrupted production would lead us to lower our oil price forecast," Goldman added.
U.S. inventory and production data for the week ended Aug. 19 is due Wednesday from the Energy Information Administration.
Analysts surveyed by The Wall Street Journal expect the agency to report that U.S. crude supplies fell slightly last week, while gasoline inventories declined and stockpiles of distillates, including diesel fuel and heating oil, rose.
The American Petroleum Institute, an industry group, said late Tuesday that its own data for the same week showed an increase in crude stockpiles of 4.5 million barrels, a 2.2-million-barrel decline in gasoline supplies and an 830,000-barrel drop in distillate stocks, according to market participants.
Gasoline futures settled up 1.46 cents, or 1%, at $1.4988 a gallon. Diesel futures gained 1.54 cents, or 1%, at $1.5018 a gallon.
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