Oil futures rose on Thursday as a two-day meeting of OPEC and other major crude producers got under way. The oil-producing group is debating deeper cuts to global output in an effort to lift prices.
West Texas Intermediate crude for January delivery CLF20, +0.44% on the New York Mercantile Exchange rose 19 cents, or 0.3%, to $58.62 a barrel, following a gain of 4.2% on Wednesday., which marked the highest settlement for the contract since Nov. 21, according to Dow Jones Market Data.
February Brent crude BRNG20, +0.87% added 52 cents, or 0.8%, to reach $63.54 a barrel on ICE Futures Europe, after surging 3.6% in the previous session.
OPEC kicked off the annual gathering in Vienna earlier Thursday, with a separate gathering that includes large non-OPEC producers — a group collectively known as OPEC+ — scheduled for Friday.
Expectations that the producers will announce a decision to extend and deepen output cuts has grown, but there is also been talk that the Saudis have threatened to boost their own production because other members have failed to fully comply with current output reductions.
OPEC+ is seeking to increase previous production cuts by more than 400,000 barrels per day from their current level of 1.2 million bpd, according to a Reuters report.
However, some commodity experts believe that the group will only extend existing output reductions, which expire at the end of March, rather than deepen cuts. Critics of the existing pact also complain that some major producers like Russia haven’t complied with production-cut terms.
“My personal opinion is that OPEC will roll the existing 1.2 million production cut program by three months, and vow to tighten up cheating. Russia will get the OK not to count [oil] condensate, giving the impression that the Russians are in compliance,” wrote Robert Yawger, director energy at Mizuho Securities USA, in a Thursday research note.
OPEC and non-OPEC producers, including Russia, have been curbing output since 2017 to counter surging U.S. shale oil production.
Read: Saudi Arabia threatens to boost its oil output, even as it calls for deeper OPEC+ production cuts
The OPEC convention comes as Saudi Arabia completes the initial public offering of a 1.5% stake in energy behemoth Saudi Aramco, which could value the company at around $1.6 trillion, with trading expected on the Saudi Tadawul stock exchange on Dec. 11.
The meeting of OPEC and its allies also comes after the Energy Information Administration on Wednesday reported that U.S. crude supplies fell by 4.9 million barrels for the week ended Nov. 29. That followed increases in each of the past five weeks. Analysts polled by S&P Global Platts forecast a fall of 700,000 barrels. The American Petroleum Institute on Tuesday reported a 3.7 million-barrel decline.
Add Comment