Oil prices edged higher from one-month lows in early trading in Asia 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 the gains were 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.
US West Texas Intermediate futures were up 9 cents at $46.95 a barrel early on Tuesday. They plunged nearly 4% to $46.86 a barrel in the previous session.
Brent for January delivery, the new front-month contract, was up 31 cents at $48.92. The previous front-month contract fell nearly 3% before expiry on Monday.
Opec approved a document on Monday outlining its long-term strategy, a sign its members are achieving consensus on managing production. But the oil grouping had setbacks earlier, raising questions over their ability to control prices that have knocked their economies hard. Representatives met on Friday in Vienna, and then again on Saturday with their counterparts from non-member producers. They did not reach any specific terms, and sources said Iran has been reluctant to even freeze output.
Oil prices had risen as much as 13% since Opec announced on 27 September a production cut to support prices after the slump that began in mid-2014. The cartel said members' cuts would be finalised at a meeting later this month.
"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.
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.
