Oil prices slipped on Monday, with Brent falling toward $80 a barrel, as investors awaited the OPEC+ meeting later this week for an agreement to curb supplies into 2024.
Brent crude futures fell 37 cents, or 0.5%, to $80.21 a barrel by 0231 GMT, while U.S. West Texas Intermediate crude futures were at $75.18 a barrel, down 36 cents, or 0.5%.
Both contracts rose slightly last week, their first weekly gain in five, underpinned by expectations that Saudi Arabia and Russia could roll over voluntary supply cuts into early 2024 and OPEC+ might discuss plans to reduce further.
Prices tumbled in the middle of last week after the Organization of the Petroleum Exporting Countries and their allies, including Russia, known as OPEC+, postponed a ministerial meeting to Nov. 30 to iron out differences on production targets for African producers.
Since then, the group has moved closer to a compromise, four OPEC+ sources told Reuters on Friday.
ING analysts said market sentiment remains negative given the dispute within OPEC+ over production quotas, although they expect Saudi Arabia to roll over its additional voluntary cut of 1 million barrels per day into next year.
“Clearly, if we do not see this, it would put further downward pressure on the market, given the surplus over 1Q24,” ING analysts said in a note.
Ahead of the OPEC+ meeting, estimated exports by OPEC countries have declined to 1.3 million barrels per day below levels in April, Goldman Sachs analysts said in a note, in line with the group’s supply targets.
“We still expect an extension of the unilateral Saudi and Russia cuts through at least 2024Q1, and unchanged group cuts, although a deeper group insurance cut is likely on the table,” the bank added.
However, the United Arab Emirates is set to ramp up exports of flagship Murban crude early next year as a new OPEC+ mandate kicks in and barrels are diverted to the international market owing to refinery maintenance, according to traders and Reuters data.
The International Energy Agency said it expects a slight surplus in global oil markets in 2024 even if the OPEC+ nations extend their cuts into next year.
Commonwealth Bank analyst Vivek Dhar said: “With the IEA forecasting that global oil demand will only grow 0.9 million bpd next year, down from 2.4 million bpd growth in 2023, OPEC+ will have to show significant supply discipline, or at least jawbone such ability, to alleviate market worries of a deep surplus in oil markets next year.”
Oil prices have also stabilised after geopolitical tensions dialled down in the Middle East following a ceasefire in Gaza and an exchange of hostages and prisoners.
(Reporting by Florence Tan; Editing by Sonali Paul)