Oil starts week with gains as OPEC moves into focus
Global oil prices firmed Monday, making a positive start in a week that will be centred on the OPEC cartel's output meeting, dealers said.
Nearing midday, Brent North Sea crude for delivery in January rose four cents to $80.40 a barrel.
US benchmark West Texas Intermediate for January advanced 15 cents to $76.66 per barrel.
The Organization of the Petroleum Exporting Countries (OPEC) will hold one of its most significant meetings in recent years on Thursday, with members under pressure to address slumping prices and protect their precious revenues.
The oil market has tumbled 30 percent since June on the back of plentiful supplies, the stronger dollar, and growing doubts about both global demand and economic growth.
Before the weekend, crude futures had rallied Friday on China's surprise interest rate cuts and rising expectations that the 12-nation OPEC cartel could decide to reduce its collective production ceiling.
"Activity (on Monday) looks to extend the positive moves seen towards the end of last week as investors position themselves ahead of OPEC's meeting in Vienna later on this week," said Sucden brokers analyst Kash Kamal on Monday.
"Prices have found support around Friday's close and with speculation among investors that Iranian oil minister, Bijan Namdar Zanganeh may propose a 1.0 million barrels per day production (mbpd) cut to OPEC members to Saudi Arabia's vocal oil minister, Ali Al-Naimi.
"We could see further upside potential in the coming sessions."
OPEC's poorer members, led by Venezuela and Ecuador, have called publicly for output to be slashed, while Iran has also hinted at a need to reduce production.
But the cartel's Gulf members, led by kingpin Saudi Arabia, are rejecting such calls unless they are guaranteed market share in the highly competitive arena, according to analysts.
- Choppy trading ahead -
"All eyes will be on the OPEC meeting in Vienna and how members are going to react to the falling prices," said Daniel Ang, investment analyst with Phillip Futures in Singapore, adding the market is divided on what action the cartel will take.
"Although oil bulls take the stand that OPEC would likely be cutting production to help support prices, we take the contrary view and expect that OPEC would unlikely be doing so," he said.
"With Libya resuming their production and OPEC's combined production already lower than past years, we believe that cuts in OPEC output are unlikely."
The market is however expected to experience choppy trade on Thursday, with many US traders absent for the Thanksgiving holiday.
"Even with this being a short week, courtesy of Thanksgiving, there will be plenty for US traders to get their teeth into, on top of the usual turkey," added analyst Alastair McCaig at trading firm IG.
"With OPEC meeting on Thursday and oil prices still struggling around the $80 level, Wednesday's US oil inventories result has taken on a little more meaning."
OPEC produces about one third of global crude at more than 30 million barrels per day. However, the cartel's actual output stood at 30.6 mbpd in October, according to estimates from the International Energy Agency.
The sliding oil prices are hurting producers hard. Russia's finance minister said Monday the tumbling prices were translating into economic damage worth "some $90 to $100 billion per year".
© 2014 AFP