Oil markets edged up in nervous trading on Wednesday ahead of an OPEC meeting later in the day, with members of the producer cartel trying to thrash out an output cut to curb oversupply that has seen prices more than halve since 2014.
International Brent crude was trading at $46.80 per barrel at 0311 GMT, up 42 cents, or 0.91 percent, from its last close.
U.S. West Texas Intermediate (WTI) crude was up 23 cents, or 0.51 percent, at $45.46 a barrel.
Traders said markets were jittery, and that prices could sharply swing either way depending on developments at the Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna.
Oil dropped nearly 4 percent the previous session over disputes between Saudi Arabia, Iran and Iraq regarding details of the planned cut.
Despite the disagreements, most analysts still expect some form of deal to emerge
“We expect OPEC will reach an agreement … We believe OPEC’s resolve in reaching an agreement remains strong,” ANZ bank said on Wednesday.
Analysts at Goldman Sachs, Barclays and ANZ agree that oil prices would quickly rise above $50 per barrel should OPEC come to an agreement. Without a deal, the consensus is for prices to fall to the low $40s.
Iran and Iraq are resisting pressure from Saudi Arabia to curtail production, making it hard for the group to reach a deal.
On Tuesday, tensions rose after Iran wrote to OPEC saying it wanted Saudi Arabia to cut production by 1 million barrels per day (bpd), much more than Riyadh is willing to offer, OPEC sources who saw the letter told Reuters.
Iranian Oil Minister Bijan Zanganeh told reporters upon arrival at OPEC’s headquarters in Vienna that his country was not prepared to reduce output: “We will leave the level of production (where) we decided in Algeria.”
OPEC, which accounts for a third of global oil production, made a preliminary agreement in Algiers in September to cap output around 32.5-33 million bpd versus the current 33.64 million bpd to prop up prices.
OPEC said it would exempt Iran, Libya and Nigeria from cuts as their output had been crimped by unrest and sanctions.
A potential compromise would be for OPEC to return to some form of member state production quota, instead of ordering outright cuts.
Although that would do nothing to end a global production overhang in which more crude is pumped than can be consumed, it would potentially help balance the market in the long term as rising demand would gradually bring consumption to output levels.