SINGAPORE: Crude prices dipped in Asia on Tuesday but held above $40 as traders looked forward to a summit of key oil producers next week to discuss freezing output and easing the supply glut.
Analysts said prices were expected to see-saw ahead of Sunday’s meeting in the Qatari capital Doha that will gather both Organization of the Petroleum Exporting Countries (OPEC) producers led by Saudi Arabia and non-OPEC members such as Russia.
A major subject for the meeting is a proposal to freeze output at January levels in a bid to ease the oversupply that helped send prices plunging by three quarters to near 13-year lows between August 2014 and February this year.
At about 3 a.m. local time, US benchmark West Texas Intermediate for delivery in May was down 13 cents, or 0.32 percent, at $40.23 and Brent crude for June was trading 15 cents, or 0.35 percent, lower at $42.68.
Both contracts closed higher on Monday after soaring 8 percent or more last week.
Barclays Research said the market was expected to remain “neutral” until after the April 17 summit.
“We expect better directional momentum after the meeting of OPEC and non-OPEC countries,” it said in a market commentary.
However, Barclays noted that the “current expectation is for their actions to have limited impact given the lack of involvement in the freeze of producers that have the potential to grow output.”
Key OPEC member Iran has been raising output since nuclear-linked Western sanctions were lifted in January and has signaled it was not about to join the freeze calls.
Some analysts have said a production cut, not a freeze, would have a lasting impact on boosting prices, amid weak demand in the oversaturated market.
“Supply outages and adjustments to output in response to lower oil prices are helping to tighten market balances,” Barclays said.
But “the demand side remains a lot softer” in the first half of 2016 relative to same period last year, it said.