Oil prices rise over expectation for fresh OPEC+ output cuts

By Sibel Morrow

Oil prices increased on Monday ahead of the much-expected OPEC+ meeting over expectations that the group will continue its current output cuts through January.

International benchmark crude Brent traded at $81.28 per barrel at 09.49 a.m. local time (0649 GMT), a 0.83% rise from the closing price of $80.61 a barrel in the previous trading session on Friday.

The American benchmark, West Texas Intermediate (WTI), traded at the same time at $76.75 per barrel, up 0.93% from Friday’s close of $76.04 per barrel.

Both benchmarks have been on a downtrend last week over diminishing concerns that the conflict between Israel and Palestine will disrupt oil trading routes.

However, prices rebounded on the first day of the week as investors priced in the scenario that OPEC’s swing producer Saudi Arabia will extend its 1 million barrels per day (bpd) of productions cut for at least another month.

Producers of the 23-member OPEC+ group had been reducing output "to ensure market stability" amid weak demand signs in China, but recent data showed that the economy of the world’s largest oil importer, China, recovered from the wounds of the COVID pandemic.

OPEC also forecast in its monthly oil report that demand in 2024 will increase as solid global economic growth amid continued improvements in China is expected to support oil consumption.

The ministers of OPEC+ group will convene on Sunday to decide their next production pact and experts say any decision would be enough to lift prices up in the short term.