SINGAPORE- Oil futures nudged higher on Monday, extending gains on expectations of OPEC+ deepening supply cuts to shore up prices, which have fallen for four weeks on easing concern of Mid-East supply disruption brought about by the Israel-Hamas conflict.
Brent crude futures climbed 11 cents, or 0.1 percent, to $80.72 a barrel while US West Texas Intermediate crude was at $75.97 a barrel, up 8 cents. The front-month December contract expires later on Monday while the more active January futures gained 13 cents, or 0.2 percent , at $76.17 a barrel.
Both contracts settled 4 percent higher on Friday after three OPEC+ sources told Reuters that the producer group, made up of the Organization of the Petroleum Exporting Countries and their allies including Russia, is set to consider whether to make additional oil supply cuts when it meets on Nov. 26.
Oil prices have dropped by almost 20 percent since late September while prompt inter-month spreads for Brent and WTI slipped into contango last week. Prompt prices are lower than those in future months in a contango market, signaling sufficient supply.
“Our statistical model of OPEC decisions suggests that deeper cuts should not be ruled out given the fall in speculative positioning and in timespreads, and higher-than-expected inventories,” Goldman Sachs analysts said in a note.
The bank’s baseline forecast is that the existing group production cuts stay fully in place in 2024, and that the unilateral cut of 1 million barrels per day by Saudi Arabia will be extended through the second quarter of next year, and reversed only gradually from July. – Reuters
