Oil trades sideways ahead of OPEC+ meeting

Oil prices were flat after two days of gains as investors counted down to a key OPEC+ meeting to set production policy for the new year. Global benchmark Brent traded around $83 a barrel after rising almost 4% in the previous two sessions, while U.S. crude was below $78. OPEC+ heavyweight Saudi Arabia is pressuring other members to join it in curbing output to avoid a renewed oil glut next year, but faces pressure from countries including Angola and Nigeria ahead of a virtual meeting on Thursday. Delegates said a deeper collective cut of 1 million bpd or more could be considered. Amid ample supply from outside the group, including record exports from the United States, the absence of group-wide cuts could lead to further weakness in oil prices after Brent fell nearly 13% in the past two months. The International Energy Agency said earlier this month that the market would return to surplus next year. “There are increasing expectations that they could make deeper supply cuts. That increasing expectation leaves the market with downside risk if OPEC+ disappoints later today,” said Warren Patterson, head of commodities strategy at ING Groep NV. RBC Capital Markets LLC expects OPEC+ to likely reach a deal with Angola and Nigeria that would allow the broader group to begin discussions on output, analysts including Helima Croft said in a note. The most likely outcome would be for Saudi Arabia to lift its 1 million bpd cut in the first quarter of 2024 and for the remaining OPEC+ members to generally stick to their current quotas for next year, Citigroup said in a note. The bank said there was a 20% chance of a deeper cut, which could prompt a spike to $5 a barrel.