Oil prices were slightly higher on Thursday ahead of next week’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) to discuss implementation of its proposed cap on production.
Brent crude futures LCOc1 were up 12 cents at $49.07 a barrel at 1501 GMT (10:01 a.m. ET). U.S. West Texas Intermediate (WTI) crude CLc1 rose 9 cents to $48.05.
Traders said market activity was low because of the U.S. Thanksgiving holiday and there was a reluctance to take on big price bets amid uncertainty about the planned OPEC-led production cut.
Russia could revise down its 2017 oil production plans if a global output freeze comes into force, effectively cutting output by 200,000-300,000 barrels per day (bpd), Energy Minister Alexander Novak said on Thursday.
OPEC will probably propose that other producers cut production by 880,000 bpd for six months starting from Jan. 1, Azerbaijan Energy Minister Natig Aliyev was reported as saying in Azeri newspaper Respublika on Thursday.
But an OPEC source told Reuters that OPEC has yet to make a final proposal to non-OPEC countries on joint production cuts, which will be discussed on Nov. 28 in Vienna.
Novak also disputed the 880,000 bpd figure and said that OPEC had earlier proposed that non-OPEC countries cut output by 500,000 bpd.
Meanwhile, Algerian Energy Minister Noureddine Bouterfa will meet his Iranian counterpart Bijan Zanganeh in Tehran on Saturday in an effort to ensure that OPEC’s third-largest producer is on board, a source told Reuters on Thursday.
“Despite 13 countries participating, an Iranian rejection to chip in would be more than enough to kill the deal,” Tamas Varga, at oil brokerage PVM Oil, said in a note.
Most analysts believe that some form of cut will be agreed, but it is uncertain whether it will be enough to prop up a market that has been dogged by a supply overhang for more than two years, according to the International Energy Agency (IEA).
“We expect OPEC will reach an agreement at next week’s biannual meeting in Vienna … If OPEC does successfully reach an agreement, prices are likely to test the year high in Brent of $53 per barrel,” ANZ bank said in a note to clients on Thursday.
IEA Director Fatih Birol told Reuters on Thursday that even if production is cut, higher prices could prompt U.S. shale oil drillers to massively increase their own output.