SCI Service Corp International Inc

By Mike Bird 

Oil prices were mixed during morning European trading Friday, following two days of strong gains as the market approaches next week's meeting of major oil producers with caution.

Brent crude on London's ICE Futures exchange rose 0.29%, to $48.35 a barrel. West Texas Intermediate, the U.S. benchmark, was down 0.22% to $46.22.

After falling in early trading, prices rose around a Reuters report that the Saudi Arabian government is ready to cut its own oil output if the Iranian government freezes its production levels.

But analysts remain skeptical over next week's meeting of the Organization of the Petroleum Exporting Countries. The general view is that OPEC heavyweights, such as Saudi Arabia, Iran and Iraq, won't be able to forge a consensus to either slash or freeze production due to their longstanding political rivalry and emphasis to expand market share.

"Even an agreement to freeze would not be bullish either, given how high current production levels are. The only bullish case would be a credible and significant supply cut, which as it stands right now is extremely unlikely," said Tamas Varga, an analyst at PVM Oil Associates.

At 11 million barrels a day, Russian production levels are now at their highest since the collapse of the Soviet Union, according to Commerzbank commodities researchers. "The supply of crude oil remains ample, in other words," the bank's analysts added in a note Thursday.

There has been a blast of rhetoric from major OPEC producers since the meeting was called in late August, which has lifted prices. Saudi Arabia and Russia this month signed an oil-cooperation agreement. OPEC oil chief Mohammed Barkindo last weekend said that if agreed by all parties, an emergency meeting could be called later this year to solidify a policy. Venezuelan President Nicolás Maduro has also said OPEC and non-OPEC members were close to a deal.

A senior OPEC official was quoted by The Wall Street Journal as saying that OPEC has to keep the chatter going, "to make sure prices don't fall to a certain level or rise to a certain level they don't like, and recently we have seen a lot of that."

Nymex reformulated gasoline blendstock for October--the benchmark gasoline contract--fell 1.1% to $1.385 a gallon.

Write to Mike Bird at Mike.Bird@wsj.com

(END) Dow Jones Newswires

September 23, 2016 07:42 ET (11:42 GMT)

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