Oil prices dip but Brent and WTI still set for monthly gains
Opec+ meets next week when it is expected to extend its supply-cut pact in its current form until at least the end of 2020
London — Oil prices dipped on Friday in muted activity because of the US Thanksgiving holiday while Opec watchers expect an extension to a pact to throttle oil output, but no deeper cuts to be agreed by the producer group and its allies next week.
Brent crude futures were down 29c at $63.58 a barrel by 10.43am GMT, heading for their biggest monthly gain since April with a rise of about 5.6%.
West Texas Intermediate (WTI) futures were flat at $58.11, tracing back earlier losses and on course for a fourth consecutive weekly increase. On a monthly basis, WTI is poised for a jump of about 7.3%, its highest since June.
The dollar is poised to register its strongest month since July, making it more expense to buy oil.
Next week’s meeting of oil cartel and allies Opec+ is also on investors’ radar.
“We don’t get any strong bullish impulses for the Opec+ meeting. It will continue the cuts and focus on compliance,” said SEB chief commodities analyst Bjarne Schieldrop. “We don’t see that they really need to cut more,” he added, pointing to forecast oversupply being counteracted by lower demand because of incoming regulations cutting marine use of high-sulphur crude.
Opec+ has agreed to cut output by 1.2-million barrels per day (bpd) through to March 2020 as US output continues to climb to record levels.
“It is highly probable that the group will rollover the deal in its current form until at least the end of 2020, but we see limited scope for a new round of cuts,” Fitch Solutions said.
On Thursday, Russian oil companies proposed keeping their output quotas unchanged, putting pressure on Opec+ to avoid any major shift at the meeting over December 5-6.
Some countries have exceeded their quotas, making compliance a likely focus at a gathering that coincides with the planned announcement of the final pricing for oil giant Saudi Aramco’s initial public offering (IPO).
Oil prices were also pressured by China’s warning to the US on Thursday that it would take “firm counter-measures” in response to US legislation backing anti-government protesters in Hong Kong.
Investors are concerned that any such move by China would further delay a preliminary agreement to end a US-China trade war that has held back growth in global economies and oil consumption.