Oil prices rose from one-month lows in Asian trading on Tuesday after OPEC agreed on a long-term strategy that was seen as an indication the cartel was reaching a consensus on managing production.
But further gains are likely to be limited as the market was weighed down by further indications of record output from the group, a sign the glut that has kept a lid on prices is not draining away as fast as the oil bulls would like.
U.S. West Texas Intermediate (WTI) futures were up 23 cents at $47.09 a barrel at 0725 GMT. They plunged nearly 4 percent to $46.86 a barrel in the previous session.
Brent for January delivery, the new front-month contract, was up 45 cents at $49.06 a barrel. The previous front-month contract fell nearly 3 percent before expiry on Monday.
“After such a dramatic price drop … this could be a bit of a technical correction. I’m still bearish on oil in the sense that the OPEC deal won’t be realized,” said Jonathan Chan, oil analyst at Phillip Futures in Singapore.
Oil prices had risen as much as 13 percent since the Organization of the Petroleum Exporting Countries (OPEC) announced on Sept. 27 a production cut to support prices after the slump that began in mid-2014. The cartel said members’ cuts will be finalised at a meeting later this month.
Still, OPEC approved a document on Monday outlining its long-term strategy that would mean returning to its role of managing the market and being more proactive in anticipating market changes.
That was a more bullish signal after OPEC representatives met on Friday in Vienna, and then again on Saturday with their counterparts from non-member producers, but failed to reach any specific terms, and sources said Iran has been reluctant to even freeze output.
“The lack of progress on implementing production quotas and the growing discord between OPEC producers suggests a declining probability of reaching a deal on November 30,” Goldman Sachs said in a research note.
Kazakhstan has no plans to reduce oil output despite attending the meetings of OPEC and non-OPEC producers, Kazakh Energy Minister Kanat Bozumbayev said on Tuesday.
Bozumbayev told reporters the giant Kashagan field, where global majors are about to begin commercial output, would be the main driver of output growth and limiting Kashagan’s production would not be possible.
OPEC’s oil output likely hit a record high in October, rising to 33.82 million barrels per day as Nigeria and Libya partially resumed output after disruptions and Iraq raised overseas sales, according to a Reuters survey.