Oil hovers near one-month lows, prospects dim for OPEC deal
By Amanda Cooper
LONDON (Reuters) - Oil held just above one-month lows on Tuesday, following its largest one-day slide in more than five weeks although analysts said the prospect of a more substantial price recovery was limited.
The market remains weighed down by record output from the world's largest exporters, and mounting uncertainty that OPEC and its rivals can do much to tackle a two-year global surplus.
Oil prices hit their highest in a year in October after the Organization of the Petroleum Exporting Countries said at a meeting in Algeria in late September it had agreed to limit production that is around record highs to help erode the surplus.
But a growing number of countries that say they are either unwilling, or unable to cut, has cast doubt on the group's ability to reach an effective deal when it meets on Nov. 30.
Brent January crude futures were up 12 cents at $48.73 a barrel by 1145 GMT, having fallen by nearly 3 percent the day before in their biggest one-day drop since Sept. 23.
U.S. West Texas Intermediate (WTI) futures were down 17 cents on the day at $46.69 a barrel, but off a session low of $46.56, following Monday's near-4 percent drop.
"We had a very strong sell-off yesterday and oil is bouncing a little bit this morning," said Olivier Jakob from Swiss-based consultancy Petromatrix.
"But Brent has fallen back to the lowest since the meeting in Algiers and basically, most, if not all of the OPEC premium has been wiped out and speculators are still very long in crude oil ... at the end of the month, we do run the risk that (they) will be selling."
OPEC has called upon major producers outside of the group to agree to limit output, but with limited success so far. Top oil producer Russia has said it will consider freezing output.
Kazakh Energy Minister Kanat Bozumbayev said on Tuesday his country would not cut output, particularly as the Kashagan field ramps up to a target of 200,000 bpd by the end of this year.
"The lack of an agreement so far has pushed oil prices sharply lower, with weakening oil fundamentals warranting oil prices in the low $40s a barrel in our view, if OPEC is unable to deliver a convincing agreement," Goldman Sachs said in a research note.
"Even if the fear of such low prices leads OPEC to deliver an agreement on November 30, we reiterate our view that the odds of it succeeding are low."
OPEC officials approved on Monday a document outlining the exporter group's long-term strategy, in a sign its members are making progress in ironing out differences over how and when to manage production levels and, ultimately, oil prices.
The approval of the document has been repeatedly postponed with OPEC price hawks such as Algeria and Iran saying the Organization of the Petroleum Exporting Countries should be prepared to defend oil prices by cutting production.
(Additional reporting by Aaron Sheldrick in TOKYO; Editing by Keith Weir and William Hardy)
