Oil futures: Crude off highs amid uncertainty over OPEC+ decision
Quantum Commodity Intelligence - Crude oil futures Tuesday were slightly higher, having given up earlier gains after prices rebounded from the previous session's 11-month lows on suggestions that Middle East producers may rein in production.
February ICE Brent futures were trading at $84.50/barrel (1935 GMT), compared to the day's high of $86.72/b and Monday's settle of $83.89/b, while Jan23 was trading at $83.61/b ahead of expiry.
At the same time, Jan23 NYMEX WTI was trading $78.54/b versus Monday's settle of $77.24/b.
Adnoc will cut December crude term volumes to some Asia-based customers by 5%, while analysts at the Eurasia Group indicated OPEC+ could further trim production.
This was enough for oil benchmarks to pare early-week losses, but traders cautioned the market remains volatile and prone to sharp headline-driven movements.
Jeff Currie, global head of commodities at Goldman Sachs, also said Tuesday that OPEC+ producers are likely to take further measures to stem a price decline and try to balance the market,
"I think there is a high probability that we do see a cut," Currie told CNBC.
Wait-and-see
However, other analysts expect the producer alliance to take a wait-and-see stance as Sunday's meeting coincides with the onset of EU sanctions against Russian crude.
"With OPEC likely to stick to the current production quota by drip-feeding supply more slowly than the recovery in demand, it could set up a better situation for Oil bulls in 2023," said Stephen Innes, managing partner SPI Asset Management.
"Suppose OPEC does cut supply in response to China's negative Covid loop. In that case, it could spark an outsized rally, much to the chagrin of Western allies who are on record of accusing Saudi Arabia of cohorts with Russia," added Innes.
According to latest reports the OPEC+ meeting has been switched to on-line, rather than gathering in Vienna, which could signal the group wants to hold off from any immediate decision.
Uncertainty over China continues to cast a shadow on oil as personal mobility dropped to a seven-month low last week, according to data from Baidu.
Mobility in China's major cities shrank by around 27% in the week to 26 November, according to the search engine, as its index dropped to its lowest since April.
Meanwhile, EU negotiators failed again to agree Monday on a price ceiling for Russian seaborne crude oil, with Poland insisting the level had to be set lower than currently proposed by the G7.
JP Morgan has cut its forecast for global benchmark Brent for 2023 to a $90/b average from $98/b, although noted: "Our forecast of $90 Brent in 2023 rests on the view that OPEC+ alliance will do the heavy lifting to keep markets balanced next year."
