Oil Ekes Out a Gain as OPEC, Allies Gear Up for Key Convocation

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

Sheela Tobben

04 Dec 2019, 04:40 AM IST

Oil Ekes Out a Gain as OPEC, Allies Gear Up for Key Convocation

Railroad tanker cars sit parked outside the Paulsboro Refining Company oil refinery in Paulsboro, New Jersey, U.S. (Photographer: Luke Sharrett/Bloomberg)

(Bloomberg) -- Oil rose for a second day as investors focused on the upcoming OPEC+ meeting that could lead to deeper supply cuts by some of the world’s biggest crude producers.

Futures edged higher in New York on Tuesday to the highest settlement in almost a week. Members of the Organization of Petroleum Exporting Countries are sending conflicting signals about whether tougher supply caps are imminent as the cartel and its allies prepare for key meetings later this week. Iraq’s oil minister reiterated his view that the group should make deeper cuts.

Crude also bounced above its 50-day moving average and the U.S. greenback declined, bullish indicators for chart-watching technical traders.

“With the OPEC meetings coming up, there are expectations that not only will there be an extension of the existing cuts but also a further production cut,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

During preparatory discussions on Tuesday, cartel delegates said deepening or extending supply cuts hadn’t been discussed. Earlier in the day’s trading session, futures fell after U.S. President Donald Trump said he was willing to wait another year to sign a trade deal with China.

Iraq’s oil minister Thamir Ghadhban said in Vienna that an additional cut of about 400,000 barrels a day may be needed to offset slowing demand. The American Petroleum Institute reported a 3.72 million-barrel decline in U.S. crude inventories, according to people familiar with the matter, more than double what analysts were predicting.

West Texas Intermediate for January delivery were up 42 cents at $56.36 a barrel on the New York Mercantile Exchange at 4:40 p.m. local time. The contract settled at $56.10.

Read our OPEC+ Reality Check: Deal Extension Likely, Compliance in Focus

Brent for February rose 14 cents to $61.06 on the London-based ICE Futures Europe Exchange, after settling at $60.82. The global benchmark crude traded at a $4.78 premium to WTI for the same month.

Other oil-market news:
Gasoline futures settled down 1.04 cents at $1.5629 a gallon The U.S. sanctioned six tankers as blocked property of Venezuela’s state-owned oil company and one ship as blocked property of Caroil Transport Marine. The oil-refinery workers’ union at Consumers’ Co-op Regina Refinery in Saskatchewan authorized a strike if their leaders deem one necessary. Russia will propose that OPEC+ accounts for condensate production when judging compliance with output targets, Energy Minister Alexander Novak told reporters in Moscow.

Other oil-market news:

Gasoline futures settled down 1.04 cents at $1.5629 a gallon
The U.S. sanctioned six tankers as blocked property of Venezuela’s state-owned oil company and one ship as blocked property of Caroil Transport Marine.
The oil-refinery workers’ union at Consumers’ Co-op Regina Refinery in Saskatchewan authorized a strike if their leaders deem one necessary.
Russia will propose that OPEC+ accounts for condensate production when judging compliance with output targets, Energy Minister Alexander Novak told reporters in Moscow.

To contact the reporter on this story: Sheela Tobben in New York at vtobben@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Mike Jeffers