The price of oil stabilized after a two-day swing as investors looked forward to the OPEC+ meeting on production that will shape market balances until 2024.
The price of Brent crude reached about $81 per barrel after rising by more than 4% on Friday, following a decline by the same percentage the previous day. West Texas Intermediate crude was also trading at just under $76.
The Organization of the Petroleum Exporting Countries and its allies are scheduled to meet during the end of this week to review the situation of the global crude market and determine priorities before the new year. With prices falling since the beginning of the year so far after a series of losses that lasted four weeks, there is speculation that the production cuts will be extended.
Warren Patterson, head of commodity strategy at ING Group, said: We still expect Saudi Arabia and Russia to extend their additional voluntary cuts into early 2024. But what is less clear is whether the alliance as a whole will make further cuts.
Crude oil prices faced significant headwinds over the past month as the war risk premium resulting from the war between Israel and Hamas faded, and concerns mounted about strong supplies, including from non-OPEC+ countries.
As US inventories swelled and price spreads pointed to weaker conditions, hedge funds cut their bets on oil's rise to the lowest level in 20 weeks.
At the same time, oil shipping costs are rising amid an increase in tanker bookings in the Middle East and the United States. This comes against the backdrop of an unexpected increase in supply, as the International Energy Agency said last week that global production growth exceeds expectations against the backdrop of rising production from countries such as the United States and Brazil.
