Crude prices crept up on Monday after skepticism over a pending OPEC output deal pulled prices down in early morning trading.
West Texas Intermediate (WTI) and Brent prices both rose by over $1 per barrel after Monday’s opening bell as investors weighed the potential outcomes of a proposed OPEC production deal.
WTI was trading at $48.24 per barrel about an hour after the opening bell on Monday, up from a previous closing price of $46.06.
Brent crude prices climbed to $48.29 per barrel on Monday morning, up from a previous closing price of $47.24 per barrel.
OPEC members are set to meet this week to discuss a proposed deal that could trim the group’s total production by about 1 million barrels per day.
OPEC members proposed a plan earlier this year to cut production down to between 32.5 million to 33 million barrels per day.
OPEC produced a record-breaking 33.8 million bpd in October, according to data collected by the International Energy Agency (IEA).
Saudi Arabian energy minister Khalid al-Falih told Reuters on Sunday that he believes the oil market will rebalance in 2017 even if OPEC output holds steady.
Al-Falih told Reuters that OPEC expects demand levels in 2017 to “be encouraging” and added that an OPEC intervention would be focused on speeding up a recovery.
However, the IEA warned earlier this month that global oil inventories could continue to swell next year if OPEC fails to implement “significant cuts.”
Saudi Arabia backed out of a meeting with non-OPEC members over the weekend, saying it wants to focus on OPEC’s internal issues before involving outside producers.
Sources told Reuters that Saudi Arabia believes a production plan will “be more effective” if the group focuses on internal matters before engaging non-OPEC producers.
According to the Wall Street Journal, Iran has been trying to negotiate an exemption from the production plan.
Iran has been reluctant to cut its production as it focuses on growing its oil industry now that Western sanctions have been lifted.
Two previous attempts to reach a production deal were scuttled earlier this year after Iran refused to cut production.
Iraqi officials have also expressed reservations about joining the cuts but pledged on Monday to cooperate with a deal.
According to Bloomberg, Iraqi officials said on Sunday that it would participate if the terms of the deal are “acceptable to all members.”
OPEC ministers will meet on Wednesday in the hopes of finalizing the details of the proposed production cuts.
Even if a deal materializes, some analysts remain skeptical that OPEC will be able to sufficiently coordinate its efforts and boost prices.
“Chances for a deal are high but we remain skeptical that it has teeth and see no lasting impact on prices,” head of commodity research at Julius Baer Group Ltd.Norbert Ruecker told Bloomberg Markets.