OPEC could make another production cut on Sunday to further support prices, and if they do not, they will likely "insinuate" that cuts are coming in the future, Matthew Smith, Kpler's lead oil analyst for the Americas, told CNBC live on Thursday.
"Everything we've heard out of OPEC in recent months is that they want to support prices around the $90 level," Smith said, noting that in September they cut production by a small amount even when prices were closer to $100, followed by the big cut of 2 million barrels per day in October when Brent was around $90.
Some analysts have also speculated that OPEC+ may wait out the Sunday meeting, which is virtual, to see what happens the following day when European Union sanctions on Russian seaborne crude go into effect, as well as to see what the G7 decides in terms of a price cap on oil.
"It seems that we are going to get a cut from them. If we don't we're going to get a lot of rhetoric about doing it," Smith said. "If they don't cut, they're going to insinuate that they are going to cut going forward."
The Kpler analyst also noted that oil prices are "somewhat in check" right now because sanctions are kicking in next week. However, he cautions that seaborne crude out of Russia isn't dropping, it's just being redirected. "In the grand scheme of things, we're not seeing Russian crude exports drop," he told CNBC.
China remains the big bearish issue for the rest of this year, with Smith forecasting that China's zero-COVID policy would likely remain in place probably until the second quarter of next year.
Earlier on Thursday, Kpler noted that OPEC output fell 550,000 barrels per day in November to 28.1 million barrels per day, in line with the October decision to slash output by 2 million bpd.
By Michael Kern for Oilprice.com
More Top Reads From Oilprice.com: