Oil prices regained some lost ground Wednesday, after tumbling nearly 3% Tuesday when it became clear that a production freeze deal would not be announced at an unofficial OPEC meeting in Algeria.
Brent Crude futures for delivery in November traded Wednesday at $46.83 up $0.86 or 1.9%, while the U.S. benchmark West Texas Intermediate rose 1.63% or $0.73 to $45.40.
Tuesday's fall followed Iran's rejection of a production cap in exchange for Saudi Arabia cutting its output, prompting the Iranian delegation to rule out a production agreement at informal OPEC talks scheduled for Wednesday.
"It's not the time for decision making," Iran's oil minister Bijan Namdar Zanganeh told reporters. "We will try to reach an agreement for November."
Saudi Arabia's delegation put a positive spin on the failure with Energy minister Khalid al-Falih describing the talks as positive and declaring "the gap between OPEC countries is narrowing."
The failure to reach an agreement, raises the prospect of supply growing further before a production cap can be agreed. That would worsen a glut in oil supply that is already expected to last well into 2017.
Iran has long maintained it should be free to increase oil output to at least the level it was at before sanctions crimped its market share. Saudi Arabia, meanwhile, has been operating its oil fields at near capacity, flooding the market in an attempt to slow Iran's revival and put U.S. shale producers out of business.
A deal between OPEC's two heaviest hitters has also been complicated by regional political rivalries, with Iran and Saudi Arabia supporting rival factions in conflicts in both Yemen and Syria.
The International Energy Agency, a body that advises oil buyers, warned earlier this month that even with a production freeze at current levels oil supply is likely to outweigh demand into the late months of 2017.
Goldman Sachs on Tuesday predicted a global oil surplus of about 400,000 barrels of oil per day through the fourth quarter of this year, and lowered its forecast price for the quarter to $43 a barrel, down from $50 a barrel, and between $45 and $50 a barrel over the first half of 2017.
As for the energy market's technical picture, Bob Byrne of Real Money (our premium site for active traders) checks out the latest charts for oil and natural gas here.