Oil steadied after a two-day swing as investors looked ahead to an OPEC+ meeting on supply that will shape market balances into 2024.
Global benchmark Brent steadied near $81 a barrel after rallying by more than 4% on Friday following a plunge of a similar magnitude the day before. West Texas Intermediate traded just below $76 after also having a volatile ride.
The Organization of Petroleum Exporting Countries and its allies are scheduled to meet over the weekend to review the global crude market and decide on priorities heading into the new year. With prices lower year-to-date after a run of four weekly losses, there’s speculation supply curbs will be extended.
“We continue to expect that Saudi Arabia and Russia will roll over their additional voluntary cuts into early 2024,” said Warren Patterson, head of commodities strategy for ING Groep NV. “However, what is less clear is whether the broader OPEC+ group will make further cuts.”
Crude has faced major headwinds over the past month as the war-risk premium generated by the Israel-Hamas war faded away, and concerns about robust supplies, including from non-OPEC+ nations, escalated. With inventories swelling in the US and timespreads signaling weaker conditions, hedge funds have slashed their bets on oil to the least bullish they’ve been in 20 weeks.
The costs of shipping oil, meanwhile, are rising rapidly amid a flurry of tanker bookings in the Middle East and the US. That’s on the back of an unexpected increase in supply, with the International Energy Agency saying last week that global production growth was “exceeding expectations” on the back of higher output from countries like the US and Brazil.
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