SINGAPORE: Oil prices fell in Asia on Wednesday as investors booked profits from recent gains, but stayed above $46 on hopes producers would decide to freeze output at a meeting next month.
Prices closed at five-week highs overnight, bolstered by a weaker dollar and after remarks by OPEC kingpin Saudi Arabia and non-OPEC rival Russia on cooperation to stabilize prices, which could include an output freeze.
US crude climbed 1.8 percent to settle at $46.48 a barrel in New York and Brent also advanced 1.8 percent to close at 49.23 in London on Tuesday.
Both contracts were down in Asian trade on Wednesday as investors booked some profits, but analysts said the decline was tempered by buying in anticipation that prices would still go higher.
“Yes, there is an element of profit taking initially. However it looks as though… Asian traders have used that profit taking move down to add to long positions,” said Jeffrey Halley, senior market analyst at OANDA.
At around 0400 GMT, US benchmark West Texas Intermediate for delivery in September was down 25 cents, or 0.54 percent, at $46.33 and Brent crude for October fell 35 cents, or 0.75 percent, to $48.88 a barrel.
Prices have surged by as much as 18 percent after closing below $40 a barrel on August 2 for the first time since April and falling into a bear market.
Analysts expect prices to fluctuate ahead of the September informal meeting in Algeria involving members and non-members of the Organization of the Petroleum Exporting Countries (OPEC).
Saudi oil minister Khalid al-Falih last week suggested that discussions could include actions to stabilize prices – widely seen as a suggestion that OPEC could revive talks on trimming high output levels.
Russian Energy Minister Alexander Novak said his country, a non-OPEC member, was working with Saudi to achieve oil market stability – hinting at possible cooperation on a freeze.
On Tuesday, a Russian delegation visited the OPEC headquarters and in a statement put out later, Novak said his country was planning a possible meeting with OPEC in October.
However, some analysts have voiced doubts that a freeze deal would be reached, recalling that previous efforts have failed.
“These oil summits have usually ended without an agreement, as was the case at an OPEC meeting earlier this year,” said OANDA market analyst Kenny Fisher.
“Iran, which has returned as a major producer after years of sanctions, scuttled that meeting and is unlikely to be agreeable to any cuts in production,” he said in a note.