Oil prices steady ahead of Opec+ meeting on supply cuts

London — Oil prices were little changed on Thursday as investors eagerly awaited the outcome of an anticipated Opec+ meeting that could lead to deeper supply cuts in 2024.

Brent crude futures for January climbed 70c to $83.80 a barrel by 9.35am GMT, on subdued volumes given the contract is due to expire on Thursday. The more active February contract was up 58c at $83.46 a barrel. West Texas Intermediate crude was 55c higher at $78.41.

The Opec+ group, which includes the Organisation of Petroleum Exporting Countries and allies including Russia, is expected to hold virtual meetings on Thursday to discuss additional production cuts of between 1-million and 2-million barrels a day in early 2024.

The meeting, being held on the same day as global leaders gather in Dubai for the UN climate conference, was originally scheduled for last week but was deferred due to disagreements over output quotas for African producers.

Implementing additional cuts will send prices higher in the immediate future but their impact over the longer term will be “dubious”, said Tamas Varga of oil broker PVM.

Compliance will be an issue, and the global oil balance is probably much less tight than Opec estimates, Varga said, citing the latest commercial inventory data from the US and the stubbornly high interest rates in many major economies that together are likely to dampen demand.

The US Energy Information Administration (EIA) on Wednesday reported a surprise build in US crude oil stockpiles last week, with inventories up by 1.6-million barrels, compared with a drop of 933,000 barrels forecast by economists in a Reuters survey.

Still, oil prices shrugged off the EIA data with all eyes on the Opec+ meeting, analysts said.

Adding to the pessimism on the demand side is China’s persisting economic troubles, embodied in the latest factory data published on Thursday, which showed a contraction for a second straight month in November.

Reuters