Oil prices end the week up in volatile trade before the OPEC meeting

NEW YORK (Reuters) – Oil prices rose slightly on Friday afternoon, restoring most gains after the announcement that major producers would consider an additional bid after US President Donald Trump once again broke the deal. cartel.

Investors wondered whether the Organization of Petroleum Exporting Countries and non-OPEC producers would make up for a deficit in Iran once US sanctions come into effect on Nov. 4. The main producers are expected to meet Sunday in Algeria.

"The question is how much oil will be taken off the market with US sanctions against Iran," said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut. The reduction in production in Venezuela and the Iranian production cuts could lead to a tightening of supply, he added. "I think the market is building energy for another test at several years highs."

World Benchmark Brent LCoC1 crude increased 10 cents to $ 78.80 per barrel. US light crude CLc1 rose 46 cents to 70.78 dollars a barrel, more than a dollar lower than the session's high of $ 71.80.

US crude increased 2.5% during the week and Brent posted a weekly gain of 0.7%.

At the start of trading, supply concerns pushed Brent up from $ 1.00 to $ 80.12 a barrel. Prices retreated after one source told Reuters that OPEC and its allies were discussing the possibility of increasing production by 500,000 barrels a day. Prices then rebounded as investors bet that Iranian production cuts would be too big to be fully offset.

The market has once again turned the tide, with traders citing concerns. US crude oil is reported to be under pressure in the fourth quarter as inventories rise after the end of the driving season.

On Thursday, Trump tied US support to Middle Eastern countries at oil prices and once again urged OPEC to lower prices. His tweet, the upcoming OPEC meeting and concerns over the imminent sanctions against Iran provoked nervousness on Friday.

Prices jumped early after a report indicated that OPEC producers and non-OPEC countries had pumped less oil in August than in July due to A drop in the Iranian supply.

"Iran's crude exports are down (earlier) and larger than expected, at a time when seasonal demand is strong. As production capacity has also fallen sharply, the market remains exposed to supply-side price shocks, "ANZ Bank analysts said in a note to their customers.

Investors have crowded into the trade, betting that OPEC can not fully offset the oil loss of its No. 3 producer, Iran. Traders have also lamented that the sanctions could prompt Iran to try to reduce crude transport on the Strait of Hormuz. The Iranian Revolutionary Guards and the army conducted a joint military exercise in the Gulf on Friday.

The information that OPEC could increase production by half a million barrels has quickly appeased these concerns.

Jason Gammel, an analyst at US bank Jefferies, said he hoped Saudi Arabia would continue to supply the market in 2019, "but at the cost of spare capacity." if Iranian exports fall below 1 million barrels a day, as seems to be the case today. "

Global sourcing concerns have downplayed the weekly data market impact showing that energy companies have cut American oil rigs for a second week in three. The account dropped from one device to 866, General Electric Co's (GE.N) Energy service company Baker Hughes said.

Last week, hedge funds and other speculators dropped their futures and options bets on US crude to the lowest level in a month or so, the Commodity Futures Trading Commission (CFTC) said on Friday.

The speculative group reduced its combined futures and options position in New York and London from 15,972 to 342,839 over the period.