February 5, 2016 / 3:17 AM / 4 years ago

UPDATE 9-Oil steady but volatile as glut concerns face OPEC cut uncertainty

* Weak fundamentals continue to drag prices lower

* Only 100,000 bpd of oil shut in globally - Wood Mackenzie

* Venezuelan oil minister to meet Saudi’s Naimi on Sunday

* Speculative activity largely behind price volatility

* US drillers deepen rig cuts in seventh week of decline (Adds rig count data, quote; updates prices, Changes dateline from LONDON)

By Devika Krishna Kumar

NEW YORK, Feb 5 (Reuters) - Oil prices were little changed in choppy trading on Friday, as a frenzy of speculation about a possible deal between top oil producers clashed with concerns about a growing supply glut.

After a volatile week’s trading, much is riding on Sunday’s meeting between Venezuelan Oil Minister Eulogio Del Pino and his Saudi counterpart Ali al-Naimi in Riyadh, after his discussions with the Qatari and Omani ministers this week.

As cash-strapped Venezuela tries to rally support for a concerted action between members of the Organization of the Petroleum Exporting Countries to boost prices, Sunday’s meeting is seen “make or break” for a possible deal, said Tim Evans, energy futures specialist at Citi Futures.

Investors were also weighing a string of conflicting indicators on Friday as the dollar recovered some of the ground lost over the past two days while investors continued to fret about growing oversupply, with U.S. inventories hitting record highs last week amid concerns about a slowing global economy.

“Volatility on the oil market is extremely high just now. This is due for the most part to the high speculative activity on the part of market participants,” Commerzbank said in a note.

Adding to this week’s rollercoaster ride with wild intraday gryations in prices was the sudden liquidation of a $600 million leveraged fund bet on falling prices.

Global benchmark Brent crude futures were 15 cents, or 0.4 percent higher at $34.61 a barrel by 1:01 p.m. EST (1801 GMT), after trading between $35.14 and $33.81.

U.S. crude futures fell 2 cents, or 0.1 percent, to $31.70 a barrel, swinging between $32.45 and $30.92.

Prices briefly turned positive after data showed U.S. energy firms this week deepened their oil rig cuts in the seventh week of declines, to the lowest levels in nearly six years.

Both contracts were stuck in a narrow $1.50 range and on track for their first weekly loss in two weeks as hopes of an OPEC-led production cut that boosted prices in January have faded and concerns about a global supply glut have returned.

In a sign that low prices are having a limited impact on production, only around 100,000 barrels per day of oil production has been shut in globally to date - less than 0.1 percent of global output -, industry research group Wood Mackenzie said on Friday.

Morgan Stanley warned on Friday that a rebalancing in the oil market may not occur until mid-2017.

Additional reporting by Ahmad Ghaddar in London and Henning Gloystein in Singapore; Editing by Marguerita Choy

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