Oil Edges Up on Expectations of Further OPEC+ Supply Cuts
Oil Futures Extend Gains on OPEC+ Prospects
Futures for oil saw a slight increase on Monday, continuing to rise due to the potential for OPEC+ to deepen supply cuts in order to stabilize prices. This comes after a four-week decline in prices, driven by concerns about demand and disruptions in Middle East supply as a result of the Israel-Hamas conflict.
Price Movement
Oil futures saw a rise of 34 cents to $80.95 a barrel by 0915 GMT. Meanwhile, U.S. West Texas Intermediate crude was up 31 cents at $76.20. The front-month December WTI contract is set to expire later today, while the more active January futures gained 38 cents to $76.42.
Potential Supply Cuts
After three OPEC+ sources indicated that the producer group is considering additional supply cuts when it meets on Nov. 26, both contracts settled 4% higher on Friday. This news comes as oil prices have dropped nearly 20% since late September and prompt inter-month spreads for Brent and WTI slipped into contango last week.
Market Response
Tamas Varga of oil broker PVM noted, “In light of last week’s obliteration of oil bulls, some kind of response was forthcoming from the (OPEC) producer group. 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.”
Other Factors
Investors are also monitoring Russian trade after Washington imposed sanctions on three ships that have sent Sokol crude to India. Additionally, U.S. energy companies added oil and gas rigs for the first time in three weeks, according to energy services business Baker Hughes.
Middle East Developments
In the Middle East, U.S. and Israeli officials have suggested that a deal to free some of the hostages held in the besieged Gaza enclave is edging closer despite fierce fighting.
