As the oil market awaits the outcome of the first leg of the two-day meeting of the Organisation of the Petroleum Exporting Countries (OPEC) taking place in Vienna, Austria, oil prices gained on Thursday.
The meeting will involve discussions on compliance and possible reduction in oil supply from members states of the cartel which will reduce the risk of an oversupply and support prices in 2020.
On the back of this, Brent crude was trading up by 47 cents or 0.75 percent on Thursday night to settle at $63.47 per barrel, while the US West Texas Intermediate (WTI) crude settled at $58.49 per barrel, gaining 6 cents or 0.1 percent, after recovering from earlier losses.
The OPEC Basket was also pointing north as it was up by 52 cents equivalent to 1.31 percent to $63.39 per barrel. Not left out, futures of OPEC member countries were all up with Nigeria’s Bonny Light crude gaining $1.09 to trade at $64.02 per barrel.
Prices have stabilized in the last few days on indications that the OPEC members may push for deeper production cuts at the meeting.
This further gained traction on Thursday when the Russian energy minister, Alexander Novak said that OPEC+ was discussing a larger-than-expected 500,000 barrel a day production cut for the first quarter of 2020.
The cartel and its allies had earlier in January agreed to cut production output by 1.2 million barrels per day in a deal that would run till March 2020 but recently there were talks that the producers including Russia would extend this till June next year, with analysts and members looking at 400,000 barrels per day.
Analysts believe this is the best decision for oil ahead of next year as the US-China trade war threatens to shaken global economic growth with President Donald Trump of the US saying a deal may have to hold on till November 2020.
Also, the cartel will be factoring into its decision oil production from outside the Non-OPEC group as this is expected to grow at the fastest rate in 40 years, by about 2.26 million barrels per day.
