Oil prices steadied after a recent downward trend as the market assessed the possibility of OPEC+ implementing deeper output cuts to balance the scales against signs of a global supply surplus.
Brent crude hovered below $80 a barrel following a four-day decline, while West Texas Intermediate dipped below $75.
OPEC+’s leader, Saudi Arabia, has urged other member nations to reduce their production quotas to bolster markets, though resistance from some members complicates the decision.
Vishnu Varathan, Asia head of economics and strategy at Mizuho Bank Ltd, cautioned oil bears against underestimating Saudi Arabia’s determination, although achieving unanimous support from member states could prove challenging.
The oil market has witnessed a roughly 20% decline since late September due to ample supplies and concerns about the global economic landscape.
This has spurred expectations for the 23-nation alliance to take corrective action at its upcoming online meeting.
A Bloomberg survey revealed that approximately half of respondents anticipate OPEC+ implementing additional measures to tighten the market.
Failure to announce an extra cut of around 1 million barrels per day on top of Saudi Arabia’s existing curbs might result in prices sinking to the low $70s per barrel, according to analysts at Eurasia Group led by Raad Alkadiri.
Reflecting this bearish sentiment, hedge funds have significantly reduced their combined net-long positions in Brent and WTI to the lowest levels since late June.
The International Energy Agency’s warning earlier this month of an impending surplus in markets next year due to a significant deceleration in demand growth has added urgency to OPEC+’s deliberations.
Meanwhile, disruptions caused by a storm in the Black Sea have halted commodity loadings, including crude, from key ports in Russia and Ukraine.
The storm is expected to persist throughout the week, according to Russia’s oil-pipeline operator Transneft PJSC.
