Global benchmark Brent crude oil hovered above $81 a barrel on Friday ahead of next week’s OPEC+ meeting, which could bring some kind of agreement on production cuts in 2024.
Brent crude futures were up 52 cents at $81.94 a barrel by 11:35 a.m. EDT (1635 GMT), having settled 0.7% down in the previous session.
US West Texas Intermediate crude were down 31 cents from Wednesday’s close, dropping to $76.81.
There was no settlement for WTI on Thursday owing to the US Thanksgiving holiday.
Both contracts were on track for their first weekly gain in five weeks as OPEC+ prepares for a meeting that will have output cuts high on the agenda after recent oil price declines on demand concerns and burgeoning supply, particularly from non-OPEC producers.
The OPEC+ group, comprising of the Organization of the Petroleum Exporting Countries and allies including Russia, surprised the market on Wednesday by delaying its Nov. 26 to Nov. 30 after producers struggled to reach a consensus on output levels.
OPEC+ has moved closer to a compromise with African oil producers on 2024 output levels, three OPEC+ sources have told Reuters.
“The most likely outcome now appears to be an extension of existing cuts,” said IG analyst Tony Sycamore.
The surprise delay had initially brought Brent futures down as much as 4% and WTI by as much as 5% in intraday trading on Wednesday.
Trading remained subdued during Thursday’s US holiday.
“While I wouldn’t be entirely surprised to see leaks or comments over the weekend that still have an impact on the oil price on the open next week, the actual meeting now occurring Thursday could put traders’ minds somewhat at ease,” said Craig Erlam, senior market analyst at OANDA.
Oil slips 2% on growing angst over delayed OPEC+ meeting
A bright spot came in the form of the near-term economic outlook in China.
Recent Chinese data and fresh aid to the indebted property sector can be “positive for the oil market’s near-term trend”, said CMC Markets analyst Tina Teng. Yet those gains could be capped by higher US crude stockpiles and poor refining margins, leading to weaker demand from US refineries, analysts said.
“Fundamentals developments have been bearish with rising US oil inventories,” ANZ analysts said in a note. Still, China’s longer-term outlook remains lukewarm. Analysts say oil demand growth could weaken to about 4% in the first half of 2024 as the property sector crunch weighs on diesel use.
Non-OPEC production growth is set to remain strong, with Brazilian state energy company Petrobras planning to invest $102 billion over the next five years to boost output to 3.2 million barrels of oil equivalent per day (boepd) by 2028, up from 2.8 million boepd in 2024.
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