Speculation about possible talks between the Organisation of the Petroleum Exporting Countries and other oil producers to cut output increased volatility in the oil markets. Global benchmark Brent traded above $35 a barrel earlier in the session, adding to the previous session's 7 percent jump, after an Iranian official was quoted as saying Tehran supported a meeting, raising hopes that they could take action to support prices despite widespread skepticism in the market.
Iran's role in any potential deal to rein in production is critical, as it appears determined to boost production and gain market share after the lifting of sanctions. Venezuelan Oil Minister Eulogio del Pino said he had a "good and productive" meeting with his counterpart from Qatar, holder of the Opec presidency in 2016, without giving more details.
He also met Oman's oil minister, who "reiterated his support of the actions Venezuela has taken to stabilise the market." Del Pino is scheduled to meet Saudi Oil Minister Ali al-Naimi on Sunday as part of a tour of oil producers to lobby for action to prop up prices, which are close to their lowest since 2003. But so far, none of Opec's Gulf members, including top exporter Saudi Arabia, has publicly backed calls for an emergency meeting.
"The market is trying to sort out whether it believes there is a meeting or not. And if there is a meeting, whether it's going to even accomplish anything," said Dominick Chirichella, a senior partner at Energy Management Institute. "We've already been on both sides of that fence today with the rallies and the dips. The biggest single thing that's absent, though, is Saudi Arabia," he added. Brent futures settled 1.6 percent, or 58 cents, lower at $34.46 a barrel, after trading between $34.15 and $35.84. US crude also ended lower, down 56 cents, or 1.7 percent, at $31.72 after swinging between $31.53 and $33.60.
Meanwhile, the 75 percent fall in oil prices since mid-2014 due to a glut of oil continued to crush major oil companies' profits. Royal Dutch Shell, Europe's largest oil company, reported its lowest annual income in over a decade. Earlier this week, the world's largest oil company ExxonMobil Corp announced its smallest quarterly profit in more than a decade while BP said its 2015 loss was its biggest ever.