Oil futures edged above $50 per barrel on Thursday (27 October) after a report suggested Opec members could cut their individual production by as much as 4%, trouncing doubts over the cartel's ability to enforce a production cut it proposed in September.
At 5:01pm BST, the West Texas Intermediate front month futures contract was up 1.67% or 82 cents to $50.03 per barrel, while Brent was 1.64% or 82 cents lower at $50.80 per barrel, as Opec chatter and a 553,000 barrel decline in US crude inventories help support prices.
Overnight, the American Petroleum Institute (API) said oil supplies surged upwards by 4.8m barrels for the week ended 21 October, nearly wiping out 5.2m-barrel draw recorded the week before.
Earlier in the session, newswire Reuters reported that energy ministers from Saudi Arabia and its Gulf allies had told the Russian government this week they are willing to reduce their peak oil output by up to 4%. The revelation follows Iraq's request that it be exempted from any proposal to cut output, with Libya, Nigeria and Iran already unwilling to go down the route.
However, Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB, believes an Opec resolution at the 30 November meeting is still possible, but that the cartel may need to adjust its proposed oil production cap.
"We think that the solution will be to change its proposed cap of 32.5m to 33.0m to 33.5m barrel per day. If our projected call-on-Opec for 2017 of 34m bpd is correct and Opec pegs its production at 33.5m bpd, then this will create a draw of 0.5m bpd through 2017 which will lead to the oil price support in 2017 which it is looking for.
"A cut from current 34.6m bpd to a cap of 33.5m bpd should be doable for Opec, with Saudi Arabia then having to reduce its production down to about 10m bpd. We think that an Opec resolution at the 30 November meeting is still possible, but they probably need to lift their proposed cap to 33.5m bpd."
Away from the oil market, precious metals, weighed down by a stronger dollar, finally saw a marginal uptick. At 5:24pm BST, the Comex gold futures contract for December delivery was up 0.14% or $1.80 to $1,268.40 an ounce, still well shy of $1,300-plus levels seen in September.
FXTM research analyst Lukman Otunuga said gold remains vulnerable to losses as the bearish combination of dollar strength and rising hopes of a US interest rate rise encourages sellers to attack.
"A potential rate hike by the US Federal Reserve in December may install bears with enough inspiration to send gold towards $1,250 and lower this year. From a technical standpoint, gold is firmly bearish on the daily timeframe with sellers maintaining control below $1,285. A breakdown below $1,260 could spark a further selloff towards $1,245."
Elsewhere in the precious metals market, the Comex silver contract for December delivery was broadly flat at $17.63 an ounce, while spot platinum was 0.06% or 59 cents higher at $963.45 an ounce.