Brent crude futures climbed more than 2%, gaining $2 a barrel on Monday as further supply cuts in OPEC+ production are expected in the coming weeks. Brent crude futures were up $2.00 to $82.61 a barrel. U.S. West Texas Intermediate crude was up $1.65, or 2.17% at $77.54 just as the Organisation of the Petroleum Exporting Countries and allies (OPEC+) are likely to extend or even deepen oil supply cuts into next year, after a more than 15% drop in Brent prices from a peak in September, eight analysts have predicted. The front-month December WTI contract expires later on Monday. The more active January futures gained $1.79 to $77.83. Both contracts settled 4% higher on Friday after three OPEC+ sources told Reuters that the producer group, comprising the Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russia, is set to consider whether to make additional supply cuts when it meets on Nov. 26. Oil prices have dropped by almost 20% since late September while prompt inter-month spreads for Brent and WTI slipped into contango last week. In a contango market, prompt prices are lower than those in future months, signalling sufficient supply.
“In light of last week’s obliteration of oil bulls, some kind of response was forthcoming from the (OPEC) producer group,” said Tamas Varga of oil broker PVM. If additional cuts are agreed, a short-term price boost is expected, but its longer-term price impact seems dubious as enforcement and adherence will be the salient issue.” Investors are also keeping an eye on Russian crude oil trade after Washington imposed sanctions on three ships that have sent Sokol crude to India. On Friday Moscow lifted a ban on gasoline exports which could add to global supplies of the motor fuel. That came after Russia scrapped most restrictions on exports of diesel last month. The number of oil and gas rigs operated by U.S. companies rose last week, the first gain in three weeks, energy services business Baker Hughes said on Friday. The oil and gas rig count serves as an early indicator of future output. Meanwhile, U.S. oil refiners are on course to boost production by 559,000 barrels per day (bpd) this week as they come out of fall planned maintenance to leave just 264,000 bpd of capacity offline, research company IIR Energy said on Monday. In the Middle East, U.S. and Israeli officials said a deal to free some of the hostages held in the besieged Gaza enclave was edging closer despite fierce fighting..
Meanwhile OPEC+ is set to consider whether to make additional cuts when the group meets later this week, sources told Reuters on Friday. The sharp selloff in oil prices has come despite a supply deficit due to OPEC+ cuts, in the fourth quarter and the risk of further supply disruption due to escalating tensions in the Middle East, as investors fret about burgeoning non-OPEC supply and softening demand in major economies. Saudi Arabia, Russia and other members of OPEC+ have already pledged total oil output cuts of about 5 million barrels per day (bpd), or about 5% of daily global demand, in a series of steps that started in late 2022. The Kingdom first made the voluntary cut of 1 million barrels per day (bpd) for July and extended it to the end of the year, as an addition to a broad supply-limiting OPEC+ deal. Reuters
