Crude oil prices were mixed in Asia Monday as the market turned cautious ahead of a key OPEC meeting near the end of the week to discuss extending supply cuts.
U.S. West Texas Intermediate (WTI) crude futures dipped 0.42% to $58.70 a barrel. ICE Brent crude futures, the benchmark for oil prices outside the U.S., rose 0.47% to $63.77 a barrel.
This week, market participants will focus on the Organization of Petroleum Exporting Countries highly-anticipated meeting on Thursday, Nov. 30 to see whether major producers plan to extend their current production-cut agreement.
Oil has advanced about 24 percent since the start of September on speculation the OPEC and its allies will prolong output reductions to drain a global glut. Russia had been hesitating over agreeing to extend cuts at the Nov. 30 OPEC meeting in Vienna because the current deal doesn’t expire until the end of March.
According to Bloomberg report, David Lennox, a commodity analyst at Fat Prophets in Sydney said “it’s likely we’ll see an extension of the OPEC-led cuts.” “The market is becoming more positive about the outlook for 2018. The response from the U.S. is the key. We’ve seen output there lift quite substantially after the recent price gains.”
Most market analysts expect the oil cartel to extend output cuts for a further nine months until the end of next year in a bid to reduce global oil inventories and support oil prices.
Energy traders will also eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.
Last week, crude oil prices finished higher in an abbreviated session on Friday, with the U.S. benchmark surging to its best level since July 2015, as the shutdown at North America’s Keystone pipeline continued to cut deliveries to storage facilities.
For the week, WTI gained about 4.2%, while Brent marked a climb of about 1.8%.
The disruption to the Keystone pipeline connecting Canada’s Alberta oil sands to U.S. refineries has reduced the usual 590,000 barrel-per-day flow to U.S. refineries, driving down inventories at the storage hub of Cushing, Oklahoma.
Flow from the pipeline, which was shut on Nov. 16 following a 5,000-barrel spill in South Dakota, was expected to be reduced by 85% through the end of November, according to line operator TransCanada.
Crude prices were further supported by growing signals that the Organization of Petroleum Exporting Countries (OPEC) and its allies will agree to prolong supply curbs when producers meet in Vienna at the end of the month.
Under the original terms of the deal, OPEC and 11 other non-OPEC producers, led by Russia, agreed to cut output by about 1.8 million barrels per day for the first six months of 2017. The agreement was then extended back in May of this year for a period of nine more months until March 2018.
The OPEC-led production cuts have been one of the key catalyst supporting the recent rally in oil prices amid expectations that rebalancing in crude markets is well underway.