LONDON (Reuters) – Oil prices steadied on Tuesday, depressed by record Saudi production but supported by expectations that oil exporters would agree to cut output at an OPEC meeting next week.
Benchmark North Sea Brent crude oil LCOc1 was unchanged at $60.48 a barrel by 1225 GMT, not far above a 13-month low of $58.41 reached on Friday. U.S. light crude CLc1 was down 10 cents at $51.53.
Oil prices are down by almost a third since early October, weighed down by an emerging supply overhang and widespread financial market weakness.
Prices rallied sharply on Monday, with Brent rising almost 2.9 percent, but the market has struggled to stay positive.
“The energy complex is making a half-hearted attempt to extend gains,” said Stephen Brennock, analyst at London brokerage PVM Oil. “However, upside potential is being capped by two upcoming risk events, namely the G20 summit and next week’s OPEC meeting.”
“A wait-and-see approach is therefore likely to prevail, which in turn will act as a damper on any looming price swings.”
Leaders of the Group of 20 nations (G20), the world’s biggest economies, meet on Nov. 30 and Dec. 1, with the trade war between Washington and Beijing top of the agenda. With the top three crude producers – Russia, the United States and Saudi Arabia – all present, oil policy is expected to be discussed.
OPEC meets in Vienna on Dec. 6 to discuss output policy together with some non-OPEC producers, including Russia.
Saudi Arabia raised oil production to a record high in November, an industry source said on Monday, pumping 11.1 million to 11.3 million barrels per day (bpd).
But the kingdom has been pushing for a collective production cut by members of the Organization of the Petroleum Exporting Countries, indicating it could reduce supply by 500,000 bpd.
GRAPHIC: Brent crude oil price slumps of 2008, 2014/2015 & 2018 in percent – tmsnrt.rs/2RiWkJ1
U.S. President Donald Trump has put pressure on Saudi Arabia, OPEC’s de-facto leader, not to cut production, but most analysts expect OPEC to start withholding some supply soon.
“We suspect that producers will start to withhold exports in the coming months, putting a floor under prices,” Capital Economics said.
Fereidun Fesharaki, chairman of energy consultancy FGE, said that a failure by OPEC and Russia to cut supply significantly would mean crude prices would “fall further, perhaps (with) Brent at $50 per barrel and WTI of $40 per barrel or less”.
GRAPHIC: Russian, U.S. & Saudi crude oil production – tmsnrt.rs/2CTwqaq
Reporting by Christopher Johnson in LONDON and Henning Gloystein in SINGAPORE; Editing by Mark Potter and David Goodman