Oil prices struggle for footing ahead of OPEC meeting

Oil futures eased to session lows on Monday, as the commodity struggled to find a footing ahead of an Organization of the Petroleum Exporting Countries meeting.

The two-day gathering that begins Monday in Abu Dhabi will discuss members’ compliance level to the output pact the cartel inked with 10 other oil suppliers, including Russia, in late 2016. The deal so far hasn’t produced meaningful effects to tamp down global output or inventories.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in September CLU7, -0.56%  was recently down 17 cents, or 0.3%, to $49.42 a barrel in the Globex electronic session. October Brent crude LCOV7, -0.59%  on London’s ICE Futures eased 18 cents, or 0.3%, to $52.24.

Prices settled higher on Friday, resulting in futures finishing the week little changed, amid a solid U.S. employment report and Baker Hughes’ weekly count showing a net decline of one the past week in active U.S. oil-drilling rigs.

Among potential major developments investors will be on the lookout for from the OPEC meeting will Libya joining the agreement to cap output. Libya and Nigeria were exempted from the initial deal because their output were marred by months-long militant attacks. However, as now both nations are pumping closer to their peak levels, there is a growing view that they should also abide by production caps.

According to S&P Global Platts, the combined July output of both African producers was 590,000 barrels above October’s, a baseline that deal participants used to determine their production caps. The OPEC’s own official monthly report will be published on Thursday.

There is a “mix of optimism, and perhaps sustained hope, that more compliance can be achieved” at the OPEC meeting, said Barnabas Gan, an economist at the Singapore-based OCBC.

Some analysts say the market shouldn’t worry too much about OPEC’s recent production figures because countries like Saudi Arabia usually boost their production during the summer to meet peak domestic energy demand. Stuart Ive, a client manager at OM Financial, said focus instead should by on August export cuts some OPEC members have said they will make.

Among refined products, Nymex September diesel was recently down 0.2% at $1.6452 a gallon, reformulated gasoline blendstock fell 0.2% to $1.6432 and August ICE gasoil shed 0.2% to $487 per metric ton.