LONDON: Brent crude futures hovered above $81 a barrel on Friday as traders kept their powder dry ahead of next week’s meeting of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, which could bring some kind of agreement on output cuts in 2024.
Brent crude futures were up 22 cents at $81.64 a barrel by 3:27 p.m. Saudi time, having settled 0.7 percent down in the previous session.
US West Texas Intermediate crude were down 45 cents from Wednesday’s close, dropping to $76.40. There was no settlement for WTI on Thursday owing to a US public holiday.
Both contracts were on track for their first weekly gain in five weeks as OPEC+ prepares for a meeting that will have output cuts high on the agenda after recent oil price declines on demand concerns and burgeoning supply, particularly from non-OPEC producers.
The OPEC+ group, which includes Russia, announced on Wednesday that its Nov. 26 meeting would be postponed 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,” said IG analyst Tony Sycamore.
The delay had initially brought Brent futures down as much as 4 percent and WTI by as much as 5 percent in intraday trading on Wednesday. Trading remained subdued during Thursday’s Thanksgiving holiday in the US.
A bright spot came in the form of the near-term economic outlook in China. 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 US crude stockpiles and poor refining margins, leading to weaker demand from US refineries, analysts said.
“Fundamentals developments have been bearish with rising US oil inventories,” ANZ analysts said in a note.
Still, China’s longer-term outlook remains lukewarm. 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.
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 by 2028, up from 2.8 million boepd in 2024.
