Oil futures drift lower ahead of meeting between Iraq and Iran

Crude oil futures recouped some of the previous day's losses in volatile trading on Wednesday, ahead of a meeting of energy ministers from Iraq, Iran and Venezuela scheduled for later in the day to try and agree on a freeze of their levels of crude oil production.

Venezuelan energy minister Eulogio Del Pino and Iraq’s oil minister, Adil Abdul-Mahdi, were expected to discuss the former's proposal for major oil producers to cap their output at January's levels, in a bid to stop the slide in prices.

Although most market observers appeared to be highly skeptical that Iran would agree to such plans, two non-Iranian sources close to OPEC discussions had told Reuters on 16 February that Iran might be offered special terms as part of a deal.

Nonetheless, Zanganeh appeared to dismiss any chance of an agreement, telling Iranian news agency Shana that "it requires discussion and examination to be seen what has been their point [...] What is important is that, first, the market is oversupplied, and, second, that Iran will not overlook its quota," he added.

As of 12:15GMT prompt-month Brent crude oil futures were advancing by 2.9% to $33.14 per barrel on the ICE after having dipped lower at the start of the session. On Tuesday, they lost 3.6% despite the announcement of a deal between Russia and Saudi Arabia to 'freeze' their levels of crude oil output at January's levels.

"Talks are expected to continue in Tehran today but expectation levels are low given that Iran has publicly stated that it will restore production to pre-sanctions levels regardless of price.

"A silver lining is that the talks are overall a positive step forward for sentiment in advance of the scheduled June OPEC meeting. Clearly though there is the need for negotiations to progress to achieve any sort of coordinated agreement in production cuts between OPEC and non-OPEC members however," Deutsche Bank's Jim Reid said in a research note sent to clients.