Oil prices edged lower this morning in volatile trading after Kuwait says it would agree to an output freeze only if all major producers took part, Reuters reports.
Meanwhile, Goldman Sachs analysts poured cold water on prospects for a sustained rally.
Brent crude futures LOCc1 were trading at $40.24 a barrel at 1442 GMT, down 60 cents on the day. Earlier in the session, the contract had climbed to a three-month high of $41.48, gaining more than 50% since its 2016 low on Jan. 20.
U.S. West Texas Intermediate futures were down 75 cents at $37.15 a barrel.
“The market has run a little bit too far too fast,” says Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.
“Expectations regarding production cuts are high, and so is the positioning of most traders and hedge funds. The potential for a surprise seems to be on the downside now.”
OPEC members and other producers in Russia are due to meet for talks on propping up prices on March 20, according to the Nigerian petroleum minister.
Kuwait’s oil minister says his country’s participation in an output freeze would require all major oil producers, including Iran, to be on board.
“I’ll go full power if there’s no agreement. Every barrel I produce I’ll sell,” Anas al-Saleh told reporters in Kuwait City.
OPEC member Kuwait is currently producing 3 million barrels of oil per day, he added.
Analysts at Goldman Sachs also say the recent price rally was premature and unsustainable.
“While these dynamics (rising prices) could run further, they simply are not sustainable in the current environment,” the analysts wrote.
“Energy needs lower prices to maintain financial stress to finish the rebalancing process; otherwise, an oil price rally will prove self-defeating, as it did last spring.”
