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Oil prices move lower after flirt with chatter-sparked rally

Rumor mill kicks into overdrive in the days leading up to an extraordinary production meeting in Algeria.

By Daniel J. Graeber
Crude oil prices move lower as markets take a wait-and-see approach to next week's production meetings in Algeria. File photo by Monika Graff/UPI
Crude oil prices move lower as markets take a wait-and-see approach to next week's production meetings in Algeria. File photo by Monika Graff/UPI | License Photo

NEW YORK, Sept. 23 (UPI) -- Fluid confidence on whether or not oil-producing nations can reach a market agreement next week in Algeria left crude oil prices mixed to lower early Friday.

Chatter in the oil market press has been a driving force in price movements as anticipation builds ahead of a meeting between members of the Organization of Petroleum Exporting Countries and non-member states on the sidelines of an international energy conference.

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The first mention of a possible agreement surfaced earlier in the summer and helped push crude oil prices briefly above $50 per barrel. On the latest rumors, an OPEC official speaking on condition of anonymity was quoted Friday by The Wall Street Journal as saying the production group needs to keep the rumor mill spinning "to make sure prices don't fall to a certain level or rise to a certain level they don't like."

Strong positive movement in crude oil prices Thursday mirrored global stocks carrying forward with the momentum sparked the previous day by a decision from the U.S. Federal Reserve to keep interest rates unchanged, though the possibility for a rate hike yet this year is in the cards.

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Crude oil prices started trading in Asia lower and moved into mixed territory at the start of trading Friday in New York. The price for Brent crude oil was up by a fraction of a percent to open at $47.71 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, dropped 0.3 percent below the previous session to start the day at $46.17 per barrel.

The Algeria chatter was fueled again by Russian officials offering competing narratives. Deputy Prime Minister Arkady Dvorkovich told state television Friday there's "a chance" for a production agreement next week. Even if an agreement is reached, Russian Finance Minister Anton Siluanov told CNBC it wouldn't have the desired impact because higher prices would support a recovery in U.S. oil production "and then the prices will fall again."

Even if there's an agreement in place, production is already on the rise with OPEC members Libya and Nigeria seeing production levels increase, which could leave a widened gap between supply and demand in place.

On the market side, European economic troubles persist with the French economy showing signs of contraction. A flash estimate of the Purchasing Managers' Index, meanwhile, shows business activity in the European Union is close to a two-year low.

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