At 1115 GMT, January ICE Brent futures were up 49 cents at $67.25/b, while the NYMEX December light sweet crude contract was up $1.45/b at $57.14/b. This gain comes after the market lost around $3-4/b for both Brent and WTI on the week.
“It appears that the market takes a production cut for granted… It is not unreasonable to anticipate stable prices until then,” analysts at PVM said in a note Monday. “Further temporary support could come from the middle of the barrel as winter starts to bite.”
The next OPEC meeting comes on December 6 in Vienna where discussion on amendments to the existing OPEC+ deal, which may include a cut in output targets and a move away from using October 2016 production to more recent data as a baseline to measure compliance, will be a feature. Delegates consider that between 1 million and 1.4 million b/d may need to be slashed.
Russian energy minister Alexander Novak said Monday that he plans to discuss a potential output cut with the country’s oil companies before OPEC/non-OPEC meetings in early December, the Prime news agency reported. “Undoubtedly, we have discussed it, and we will discuss it. We are in constant contact and we will discuss it further to develop a position by December,” Novak said, when asked if a cut is under discussion, according to the report.
Russia remains the key non-OPEC participant in the production cut deal with OPEC that has been in force since early 2017. The downward spiral in crude futures prices last week indicates the concern of oversupply against the backdrop of weaker demand. Various bearish indicators pressured the downside including falling financial markets, tepid global growth battling a strong US dollar and the US-China trade war.
“It’s caught quite a few people off guard,” said Geordie Wilkes, head of research at Sucden Financial in London. “Short sellers have compounded the price quite heavily and the market is at risk of selling off once again. We need to be careful of prices moving beyond where fundamentals suggest value could be.” The next cue for price direction will come from US inventory data, Wilkes added, as the market awaits the release of US inventory data by the American Petroleum Institute on Tuesday and the Energy Information Administration on Wednesday. Platts.com
