Starting the day in the deep red, crude oil prices for Tuesday are on pace for a high degree of volatility as oil ministers continue talks in Vienna.
Crude oil prices erased a 5 percent deficit in a matter of hours Monday as investors moved on knee-jerk sentiment emerging from Vienna, where delegates from major oil-producing nations are reviewing the prospects of coordinating on a production cap. Different positions from the 14 members of the Organization of Petroleum Exporting Countries, as well as the many non-member states in attendance, has made for highly volatile trading in the last days of November.
An article published by SHANA, the Iranian Oil Ministry's news website, suggests markets are as fluid as the positions from Vienna.
"Oil market equilibrium is highly fragile now," the piece read.
Iran and Russia had coordinated at the presidential level and both countries are already producing oil at high levels, complicating the task of establishing a production ceiling among the various players.
The price for Brent crude oil started the day in New York down 3.1 percent from the previous close to $46.72 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, was off 3.2 percent to open at $45.54 per barrel.
Wide price swings are expected at least through midweek, when OPEC talks in Vienna conclude. Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said it will remain a "headline market" until at least Wednesday as investors take note of the minute-by-minute accounts from Vienna.
Elsewhere, markets could be influenced if attention shifts to reports on U.S. gross domestic product. The U.S. Bureau of Economic Analysis finds GDP grew at an annual rate of 3.2 percent in the third quarter, compared with a 1.4 percent increase in the second quarter. That could increase the U.S. economy's appetite for a rate hike, influence the value of the U.S. dollar and further steer crude oil prices.
Traders will get an additional injection of data Wednesday as the U.S. Energy Information Administration releases weekly data on supply levels in the domestic market. A survey from S&P Global Platts finds crude oil inventories likely fell by 250,000 barrels, compared with an average of 900,000 barrels for this week over the four years ending in 2015.
