Oil prices slid Friday as caution prevailed before a crunch producers’ summit this weekend, which could deliver an output freeze deal to curb fresh losses on the market.
At about 1130 GMT, US benchmark West Texas Intermediate (WTI) for delivery in May lost 98 cents to $40.52 per barrel.
Brent North Sea crude for June delivery dived $1.03 to $42.81 a barrel compared with Thursday’s close.
The market has however risen this week on optimism that major global oil producers would agree a production freeze when they meet in the Qatari capital on Sunday.
The gathering will involve both members of the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, and non-OPEC producers such as Russia.
“Oil is trading a little lower so far today having entered into consolidation mode … as traders adopt a cautious approach ahead of Sunday’s meeting of oil producers in Doha,” said analyst Craig Erlam at traders Oanda.
“The outcome of Sunday’s meeting is likely to be the catalyst for the next move with the prospect of a deal being broadly being behind prices rising” over the week.
Iran’s oil minister will not join an Iranian delegation at Doha, Tehran announced on Friday.
In a statement carried by the Shana news agency, the ministry said Bijan Zanganeh would skip the talks in Doha, adding that “Iran already announced it cannot join the plan to stabilise oil prices” while its output is still below pre-sanction levels.
The ministry said Iran’s OPEC representative would attend the meeting instead.
Tehran is expected to seek a waiver as it increases output after the lifting of nuclear-related Western sanctions.
OPEC kingpin and regional rival Saudi Arabia has vowed not to join an output freeze unless Iran does the same.
Oil prices, which hit a 13-year low earlier this year, have rebounded sharply in recent weeks partly on expectation that a deal between OPEC and non-OPEC producers in Qatar could help to reduce a global crude supply glut.
OPEC said Wednesday that Iranian oil production in March was 3.3 million barrels per day (bpd), up from 2.9 million in January, but still short of its pre-embargo level of around 4.0 million.
“Iran supports efforts… to stabilise the market and support prices,” oil ministry spokesman Akbar Nematollahi was quoted as saying Friday.
“Iran’s representative will go to Doha to explain the position of Iran and revive efforts to improve the market situation.”
In earlier Asian deals on Friday, oil prices had risen after the International Energy Agency (IEA) said it saw the crude supply glut almost disappearing by the year’s end.
The IEA report said the oil surplus would fall to 200,000 barrels per day in the second half of this year from 1.5 million bpd in the first six months.
However, the Paris-based agency said any decision by oil producers to freeze output would have “limited” impact compared to trimming production, which would have a more permanent effect in boosting prices.
But trading sentiment was tempered by a report on Wednesday showing a sharper-than-expected rise in US commercial crude inventories, indicating softer demand in the world’s top oil consumer.
Oil slumped by about three quarters between mid-2014 and last February — when they hit 13-year lows — on the back of the global supply glut and overproduction.