Brent crude futures were steady on Friday as traders kept their powder dry ahead of an OPEC+ meeting that could bring agreement on further supply cuts.
Brent crude futures were down eight cents, or 0.1 percent, at $81.34 a barrel by 0913 GMT, having settled 0.7 percent down in the previous session.
U.S. West Texas Intermediate crude lost 70 cents, or 0.91 percent, from Wednesday’s close to $76.40. There was no settlement for WTI on Thursday owing to a U.S. public holiday.
Both contracts were on track to register for their first weekly gain in five weeks, supported by some hope that the Saudi-led OPEC+ producer group could reduce supply to balance the market into 2024.
The Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, surprised the market with an announcement on Wednesday that it would postpone a ministerial meeting by four days to Nov. 30 after producers struggled to reach a consensus on production levels.
“The most likely outcome now appears to be an extension of existing cuts,” IG analyst Tony Sycamore wrote in a note.
The surprise delay had initially brought Brent futures down as much as 4 percent and WTI by as much as 5 percent in Wednesday’s intraday trading.
Trading remained subdued because of the Thanksgiving holiday in the United States.
The near-term economic outlook in China, meanwhile, supported market sentiment.
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 U.S. crude stockpiles and poor refining margins, leading to weaker demand from U.S. refineries, analysts said.
“Fundamentals developments have been bearish with rising U.S. oil inventories,” ANZ analysts said in a note.
China’s longer-term outlook is lukewarm, however. Analysts say oil demand growth could weaken to about 4 percent in the first half of 2024 as the property sector crunch weighs on diesel use.
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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.
By CityAM
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Their rationale is that market fundamentals are solid and global oil demand is robust underpinned by record-breaking Chinese crude oil imports and a tight market.
Moreover, Brent crude at 81.50 dollar a barrel is at the bottom end of what is acceptable for OPEC Plus despite deliberate efforts by speculators and oil traders to cast doubt about the strength of demand and force prices down.
Therefore, prices will soon resume their upward trajectory.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert