Oil prices plunged to three-month lows last week on market speculation that OPEC would not be able to follow through on its pledge to cut production at its Nov. 30 meeting. WTI dipped below $43 per barrel during intraday trading.
However, oil prices moved up by almost 3 percent at the start of Tuesday, after OPEC officials said that they were trying once again to overcome their differences.
A deal is going to be a long shot, however. OPEC has boosted output in the weeks leading up to the November meeting, as countries scramble to lock in higher production levels should their actually be a deal. Collective output jumped by 236,000 barrels per day last month compared to September, which makes OPEC’s job at its November meeting all the more difficult. Instead of trying to cut somewhere between 200,000 and 700,000 barrels per day, the group now needs to cut something like 500,000 bpd to 1 million barrels per day. The original proposal was going to be tough, but the steeper cuts required ups the ante for the Vienna meeting.
Previous rounds of negotiations have failed miserably. At the end of October, negotiators reached a standstill with little progress on the technical details of a production cut.