A view of the Kaombo Norte, a Floating Production Storage and Offloading vessel (FPSO), a project operated by Total, the French multinational oil company, on November 8, 2018, about 250km off the coast of Angola in the Atlantic Ocean. Picture : RODGER BOSCH / AFP
A view of the Kaombo Norte, a Floating Production Storage and Offloading vessel (FPSO), a project operated by Total, the French multinational oil company, on November 8, 2018, about 250km off the coast of Angola in the Atlantic Ocean. Picture : RODGER BOSCH / AFP

Singapore — Oil prices rose by 1% on Wednesday ahead of an Opec meeting next week at which the producer club is expected to decide some form of supply cut to counter an emerging glut.

The shutdown of Britain’s largest North Sea oilfield for repairs also supported prices, traders said.

US West Texas Intermediate (WTI) crude futures were at $52.11 a barrel at 4.48am GMT, up 55c, or 1.1% from their last settlement.

International Brent crude oil futures were up 57c, or 1%, at $60.78 a barrel.

The Buzzard oilfield, which pumps about 150,000 barrels a day has closed temporarily after the discovery of pipe corrosion. A smaller field linked to Forties, Total’s Elgin-Franklin, is also shut for maintenance. As a result, trade sources said three cargoes due to load in December had been cancelled.

Despite Wednesday’s rise, oil prices have still lost about 30% in value since early October, weighed down by an emerging supply overhang and by widespread weakness in financial markets.

The crude oil price slump since October is so far on par with the 2008 price crash and steeper than that of 2014-2015.

Producer cartel Opec will meet at its headquarters in Vienna, Austria, on December 6 to discuss output policy.

The Opec-meeting will follow a gathering by the Group of 20 (G20) nations, which includes the world’s biggest economies, in Argentina this weekend, at which the China-US trade dispute as well as oil policy are expected to be discussed.

While most analysts expect some form of supply cut from the Opec meeting, sentiment in oil markets remains negative.

“Options traders remain focused on downside risks following a 30% slide in WTI,” Erik Norland, senior economist at commodities exchange CME Group wrote in a note, referring to the higher number of traders who have placed positions that would profit from a further fall in crude prices than those placing bets on a rising market.

Portfolio managers have slashed their combined net long position in crude futures by a total of 607-million barrels over the past eight weeks, the largest reduction over a comparable period since at least 2013, when the current data series began, exchange data showed.

A concern to global markets is a slowdown in global trade as a result of the China-US trade dispute, swelling debt and a strong dollar that puts pressure on emerging markets.

The World Trade Organisation (WTO) said in its latest outlook, published on Tuesday, that “trade growth is likely to slow further into the fourth quarter of 2018”, with growth likely at its slowest since October 2016.

Reuters