Oil prices rise as OPEC+ meets to discuss supply cuts

Oil prices rose by more than 1% on Thursday in anticipation of the outcome of an OPEC+ meeting with potential further supply cuts in 2024 on the agenda.

Brent crude futures for January gained 91 cents, or 1.1%, to $84.01 a barrel by 1417 GMT. The front-month Brent contract expires later on Thursday.

The more liquid February contract was up 83 cents, or 1%, at $83.71.

U.S. West Texas Intermediate crude futures rose by 81 cents, or about 1%, to $78.67.

The OPEC+ producer group comprising the Organization of the Petroleum Exporting Countries (OPEC)) and allies including Russia, could reach a deal encompassing production cuts approaching 2 million barrels per day (bpd) depending on the outcome of negotiations among members on Thursday, one source told Reuters.

Saudi Arabia’s pledge to extend its voluntary cut would be “really important and take out the risk of a collapse (in any mooted deal),” said Investec analyst Callum Macpherson.
But investors will be waiting for a formal announcement from Thursday’s meeting and a breakdown of the additional cuts. “Who will have to make the cuts? How long will they last?” Macpherson added.

The meeting, being held on the same day as global leaders gather in Dubai for the U.N. climate conference, was originally scheduled for last week but was deferred because of disagreements over output quotas for African producers.

The OPEC+ Joint Ministerial Monitoring Committee (JMMC) ended its meeting on Thursday without making a recommendation regarding 2024 output levels, three delegates told Reuters.

The committee met ahead of the wider meeting of ministers from the OPEC+ group of oil-producing nations.

Implementing additional cuts will send prices higher in the immediate future, but the long-term impact is harder to predict, said Tamas Varga of oil broker PVM.

Compliance will be an issue and the global oil balance is probably much less tight than OPEC estimates, he said, citing the latest commercial inventory data out of the United States and the effect on demand from stubbornly high interest rates in many major economies.