Oil. Picture: REUTERS
Oil. Picture: REUTERS

London — Oil prices edged lower on Thursday ahead of a key Opec meeting where members are expected to weigh up deeper output cuts in an effort to prop up prices and prevent a glut in 2020.

The oil cartel is seeking to extend production cuts of the group together with its allies led by Russia by more than 400,000 barrels per day (bpd) from their current 1.2-million bpd, sources told Reuters.

Opec meets on Thursday in Vienna followed by a meeting with Russia and other producers, a group known as Opec+, on Friday.

Brent crude futures were down 14 US cents, or 0.22%, to $62.86 a barrel at 8.45am GMT. Brent surged 3.6% on Wednesday.

West Texas Intermediate (WTI) crude futures fell 21c, or 0.34%, to $58.23 a barrel. They settled up 4.2% on Wednesday.

The Opec+ group has been curbing output since 2017 to counter surging production from the US, which is now the world's biggest oil producer thanks to a rapid growth in shale oil output.

In 2020, rising production in other non-Opec countries such as Brazil and Norway threatens to add to the glut.

“We expect a constructive outcome to today’s meeting in terms of a prolongation of the deal, but are not yet convinced that a strong bullish surprise with a sizeable adjustment to the target level will really transpire,” Vienna-based consultancy JBC Energy said in a note.

Oil prices surged on Wednesday on expectations of deeper Opec cuts and data showing a large drop in US crude inventories last week.

Prices are, however, roughly where they were a week ago, before they plunged on a lack of progress on resolving a 17-month-old China-US trade war that has hit weakened global economies and dented demand growth for oil.

US President Donald Trump on Wednesday described trade talks with China as going “very well”, a day after saying it could take until after 2020's presidential election to complete an agreement.

Reuters