Picture: REUTERS
Picture: REUTERS

London — Oil rose on Friday on hopes that supply cuts will be agreed at oil cartel Opec’s meeting on December 6, but failed to recoup recent losses on over-supply concerns that have shaved more than a fifth off the Brent crude benchmark since early October.

Brent was up 85c at $67.47 a barrel by 9.29am GMT. It has been recovering for three sessions since hitting an eight-month low on Tuesday but is still on course for a weekly loss of about 4%.  US West Texas Intermediate (WTI) futures rose 55c to $57.01 a barrel after their steepest one-day loss in more than three years on Tuesday.

With WTI set for a weekly loss of about 5.3%, both benchmarks are poised to chalk up their sixth consecutive weekly drop. “The trend is down — stick with it,” PVM technical analyst Robin Bieber said.

Prices were mainly supported by expectations that Opec would start withholding supply soon, fearing a repeat of the 2014 price rout.

Some analysts said an extended rally is possible with support from US sanctions on Iranian oil once current waivers expire, as well as lower Venezuelan production and uncertainly over Libyan output.

“We are likely, from December onwards, to have at least 1-million barrels per day (bpd) less of crude exports,” Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas, told the Reuters Global Oil Forum. Tchilinguirian said he would not be surprised if Brent hit $80 a barrel this year.

Opec’s de facto leader, Saudi Arabia, wants the cartel to cut output by about 1.4-million (bpd), about 1.5% of global supply, sources told Reuters this week. The Saudis would ideally have Russia participate but Russia has yet to commit to any renewed joint action.

Morgan Stanley warned that a cut by the Middle East-dominated group might not have the desired effect.

“The main oil price benchmarks — Brent and WTI — are both light-sweet crudes and reflect this glut,” the US bank said. “Opec production cuts are usually implemented by removing medium and heavier barrels from the market but that does not address the over-supply of light-sweet.”

While Opec considers withholding supply, US crude oil production reached another record last week, at 11.7-million bpd, according to the US Energy Information Administration (EIA).

The record output helped US crude oil stocks to their biggest weekly build in nearly two years. Bank of America Merrill Lynch said in a note, Oil bulls, us included, have capitulated and we no longer see oil climbing to $95 a barrel next year.”