Oil prices gain as investors eye deeper OPEC cuts

Daniel Fowler
December 3, 2019

U.S. West Texas Intermediate (WTI) crude futures rose 30 cents to $56.26 a barrel.

The Organization of Petroleum Exporting Countries and its allies, who will gather in Vienna in the coming days, are poised for a debate about some nations' lax implementation of production cuts.

Many experts concur that the group, dubbed as OPEC+, should make deeper cuts to the current oil production level to boost crude oil prices.

Brent futures rose 17 cents, or 0.3 per cent, to $61.09 a barrel by 0516 GMT, after having gained 0.7 per cent on Monday.

Crude has climbed since early October on signs the US-China are close to a breakthrough on an initial trade deal.

"I have no deadline, no", Trump told reporters in London, where he was due to attend a meeting of North Atlantic Treaty Organisation leaders.

OPEC and other major oil producers are expected to agree to deepen output cuts to 1.5 million barrels per day (bpd) to the end of 2020 from 1.2 million now to help reduce a global supply overhang, JPMorgan said in a note on Tuesday.

Russian Energy Minister Alexander Novak on Tuesday said he expected this week's meeting to be constructive but added that Moscow had yet to finalize its position.

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US President Donald Trump said that a trade agreement with China might have to wait until after the US presidential election next November, denting hopes of a quick resolution to a dispute that has weighed on the world economy.

"Already large speculative buying in recent weeks and some expectations for a longer/larger cut suggests that an uneventful three-month extension is unlikely to provide much upside to current prices".

The investment bank said it expected Brent to trade around $60 a barrel in 2020, "absent new growth or geopolitical shocks".

USA crude inventories probably shrank by 1.5 million barrels last week, according to a Bloomberg survey.

OPEC's ministers will meet in Vienna on December 5 and the wider OPEC+ group will meet on December 6.

While OPEC may cut output, United States producers have been only too happy to meet any market shortfalls, with production set successive records.

USA crude inventories are expected to have declined last week, which may support prices, with analysts in a preliminary Reuters poll suggesting a contraction of 1.8 million barrels.

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