Oil rates turned positive on Wednesday despite concerning doubts that OPEC will agree to a production cut large enough to make a significant dent in the global glut of crude–Brent crude futures were up 16 cents at $49.28 a barrel.
Oil prices trended lower earlier in the morning but turned positive after the Energy Information Administration reported that U.S. crude stocks unexpectedly fell by 1.3 million barrels last week.
Members of the Organization of the Petroleum Exporting Countries (OPEC) will meet next week in Vienna to decide on the details of an agreement to cut output that the group has been trying to hammer out since September.
In the U.S. market, West Texas Intermediate (WTI) crude oil futures were up 19 cents at $48.22 a barrel at 10:44 a.m. EDT (1544 GMT) after rising to $48.43 earlier on Wednesday.
Calendar spreads, the difference in price between one month and the next in the futures market, showed little signs that traders are pricing in a big change in market fundamentals.
The front to second-month WTI calendar spread traded at the widest in seven months on Tuesday, although it narrowed slightly on Wednesday. The one to six-month spread traded at one of the widest levels since August.
The WTI cash roll, which allows physical traders to roll long positions forward, traded down to negative $1.80 a barrel on Tuesday, the weakest since March.
All are indications of expectations that there will be little change in oversupply in the market in the near term.
“Looking at the forward curve, the spread has gotten substantially weaker on the WTI side … so that’s bearish and pressures the front of the curve,” said Tariq Zahir, an analyst at Tyche Capital Advisers in New York.
The success of OPEC’s deal hinges on OPEC’s second and third-largest producers, Iraq and Iran, coming to an agreement with Saudi Arabia on the extent of a cut.
Traders anticipate some OPEC agreement, but doubts remain over whether the group would agree to a proposed cut of 4 percent to 4.5 percent under discussion. That would imply a reduction in supply of more than 1.2 million barrels per day, according to Reuters calculations.