Oil prices rally again on Algerian speculation

WASHINGTON, Sept. 28 (UPI) -- The renewed possibility of a production deal in Algeria offset comments about a delayed market balance to push crude oil prices higher early Wednesday.

The rumor mill remained in full spin on the sidelines of an international energy forum in Algeria. Iranian Oil Minister Bijan Zanganeh said Wednesday reaching an agreement on production levels between members of the Organization of Petroleum Countries and non-member states would likely erase some of the supply problems dragging on crude oil prices.

Crude oil prices moved higher in early Wednesday trading as markets move in knee-jerk fashion to the latest chatter from Algeria. The price for Brent crude oil was up 1.2 percent from the previous day to $46.52 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, gained 1.1 percent to start the day in New York at $45.18 per barrel.

Zanganeh's comments Tuesday that there was no proposed deal offered by rival Saudi Arabia helped push crude oil prices deep into negative territory. SHANA, the news service for Iran's Oil Ministry, reported Zanganeh said OPEC members were expected to respect Iran's quest to retake market positions lost to international sanctions should any production deal emerge.

Similar comments derailed efforts toward a production agreement proposed early this year in Doha.

Meanwhile, Fatih Birol, the executive director of the International Energy Agency, said in an interview with energy reporting service Argus that global demand for energy products was weaker than expected.

"There is a significant amount of oil surplus in the markets," he added.

A lopsided market helped drag oil down from $100 per barrel common just two years ago. Oil touched $50 per barrel briefly this year, but has faltered as the gap remained large between supply and demand.

The American Petroleum Institute reported another decline in U.S. crude oil inventories last week and the market could take a more bullish position later in the trading day if that trend is confirmed by the U.S. Energy Information Administration. In competing data, Russia said next year it could start pulling even more oil out of a Far East field even as ministers mull production cuts in Algeria.