Saudi Energy Minister Khalid al-Falih said on Wednesday OPEC was close to clinching a deal to limit oil output, adding Riyadh would agree to Iran freezing production at pre-sanctions levels.
International Brent crude oil declined nearly 0.50% to around $47.66 per barrel, while U.S. West Texas Intermediate crude dipped below $46.50 in early Asian trade on Tuesday.
If OPEC agreed a production cut to 32.50 million bpd, crude prices would likely rise to the low US$50s a barrel, Goldman said.
"Market is slowly inching up supported by a strengthening rupee and the reducing prospects for an oil output freeze in tomorrow's OPEC meeting", Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services, said in a note.
The expert pointed out that Saudi Arabia is very much interested in this deal, as it will push valuation of its ARAMCO IPO in 2017 to higher levels.
Saudi Arabia, OPEC's de facto leader, put an impossible informal deal on the table today ahead of the cartel's official meeting on Wednesday.
OPEC members will meet Wednesday about cutting oil production to ease the global oil glut that has been weighing on the commodity's prices.
For his part, Algerian Energy Minister, Noureddine Boutarfa, on 26 November proposed to Iran that OPEC cut production by a combined 1.1m barrels a day.
Now the calculations are made that the production is going to hit 8.7 million barrel a day from 2017.
Iran and Iraq were said to still have reservations about curbing production as a technical meeting ended Monday.
Al-Falih's comments came two days after Saudi Arabia pulled out of a meeting with nonmembers, including Russian Federation, arguing that OPEC needs to sort out its internal divisions before engaging with other producers.
US West Texas Intermediate crude futures CLc1 were down 23 cents, or 0.5 percent, at $46.85 a barrel.
OPEC said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions.
However, there is good cause to believe that Saudi Arabia's manipulative tactics may actually have to do with U.S. President-elect Donald Trump...
Chances of a deal remain "50-50", and failure to reach an agreement could lead to a "sharp correction", sending prices plunging into the $20s, she said.
The oil market "is treading into some unsafe waters" by ignoring the strength of the dollar and high inventories, said Bill O'Grady, chief market strategist at Confluence Investment Management in St. Louis.
Iranian Oil Minister Bijan Zanganeh told reporters upon arrival at OPEC's headquarters in Vienna that his country was not prepared to reduce output: "We will leave the level of production (where) we decided in Algeria".
Oil prices plunged well over 3 per cent on Tuesday (Nov 29) in London on signs that leading oil exporters were struggling to agree a deal to cut production to reduce global oversupply.