Brent crude futures climbed 66 cents, or 0.8%, to $81.27 a barrel by 0700 GMT while U.S. West Texas Intermediate crude was at $76.49 a barrel, up 60 cents or 0.8%.
Oil futures edged 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 Middle East supply disruption amid the Israel-Hamas conflict.
Brent crude futures climbed 66 cents, or 0.8%, to $81.27 a barrel by 0700 GMT while U.S. West Texas Intermediate crude was at $76.49 a barrel, up 60 cents or 0.8%.
The front-month December contract expires later on Monday while the more active January futures gained 65 cents, or 0.9%, at $76.69 a barrel.
Both contracts settled 4% 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% since late September while prompt inter-month spreads for Brent and WTI slipped into contango last week. In a contango market, prompt prices are lower than those in future months, signalling sufficient supply.
Saudi Arabia, OPEC’s de-facto leader, is balancing the desire to keep oil prices high by limiting supply with the knowledge that doing so will lead to a further drop in overall market share, said Jorge Leon, senior vice president of oil market research at Rystad Energy, in a client note.
“Oil markets will be looking to see if Saudi Arabia extends these cuts into 2024 or if it chooses to gradually unwind them or simply let them expire at the end of this year,” Leon said, citing the International Monetary Fund’s estimates of Saudi Arabia’s oil fiscal break-even price at $86 a barrel.
“Our analysis suggest that (the) Saudis will need to keep giving away market share, at least until June 2024, to achieve that price level.”
IG analyst Tony Sycamore said WTI prices may rise toward $80 a barrel on the back of the possibility that OPEC+ does announce deeper cuts at its upcoming meeting though a drop below $72 will encourage the Biden administration to refill the U.S. Strategic Petroleum Reserve.
“All of which suggest that a rebound in prices is likely in the first half of this week,” Sycamore said.
Investors are also eyeing disruption in Russian crude oil trade after Washington imposed sanctions on three ships that have sent Sokol crude to India.
On Friday, Moscow lifted a ban on gasoline exports which could add to global supplies of the motor fuel. That came after Russia scrapped most restrictions on exports of diesel last month.
U.S. energy firms last week also added oil and gas rigs for the first time in three weeks, said energy services firm Baker Hughes on Friday. The oil and gas rig count serves as an early indicator of future output.
In the Middle East, U.S. and Israeli officials said a deal to free some of the hostages held in the besieged Gaza enclave was edging closer despite fierce fighting.
Source:financialexpress.com