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Oil futures sank Friday on more skepticism that the world's largest exporters are about to start cooperating and ease a supply glut that has dragged down prices for two years.

Crude fell sharply just before noon after Bloomberg News reported Saudi Arabia doesn't expect the Organization of the Petroleum Exporting Countries to reach an agreement when it meets later this month in Algeria's capital. The comments echo those made last weekend by the group's secretary-general to Algeria's state news agency APS that the meeting is informal and not for "decision-making."

Traders "are reacting with disappointment and disgust," said Donald Morton, senior vice president at Herbert J. Sims Co., who runs an energy-trading desk.

U.S. crude for November delivery dropped $1.84, or 4%, to $44.48 a barrel on the New York Mercantile Exchange.

The losses erased two days of gains and a small, but positive start to Friday's trade that had come as traders became more optimistic about a deal. A Reuters report Friday morning said the Saudi Arabian government is ready to cut its own oil output if the Iranian government freezes its production levels.

But Saudi Arabian and Iranian oil officials also have clashed this week over production limits while meeting at the OPEC headquarters in Vienna, The Wall Street Journal reported later Friday morning. Saudi Arabia and Iran couldn't agree on what statistics should be used to determine oil output levels for a potential "freeze"—the term used to describe a joint effort by big producers to limit their petroleum output at the current pace or lower.

Short bursts of optimism have often been broken by widespread skepticism from analysts and traders about OPEC's ability to strike a deal. Heavyweights including Saudi Arabia, Iran and Iraq have longstanding political rivalries and have been stuck in a fierce competition to undercut each other and sell more oil.

"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.

Prices have often been bolstered by blasts of rhetoric from major OPEC producers since late August when they broached the idea of informal talks and better cooperation. 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 Nicolá s Maduro also has said OPEC and non-OPEC members were close to a deal.

"There's a chance of success," said Robert Minter, investment strategist at Aberdeen Asset Management, which had $402.8 billion in assets under management at the end of June. "It would at least show that they can once again act together and achieve a consensus."

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."

Summer Said and Benoit Faucon contributed to this article.

Write to Timothy Puko at tim.puko@wsj.com and Mike Bird at Mike.Bird@wsj.com

(END) Dow Jones Newswires

September 23, 2016 15:05 ET (19:05 GMT)

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