Crude oil futures inched lower during mid-morning trade in Asia Friday as markets were waiting for more clarity on the proposed deepening and extension of OPEC’s ongoing supply cut agreement.
At 10:40 am Singapore time (0240 GMT), ICE February Brent crude futures fell 14 cents/b (0.22%) lower from Thursday’s settle to $62.24/b, while the front-month NYMEX January light sweet crude contract moved 10 cents/b (0.17%) lower to $58.33/b.
OPEC, Russia and their allies are considering a recommendation to cut an additional 500,000 b/d of crude production through the first quarter of 2020, with an option to extend it for the whole year, OPEC said Thursday after its meeting at Vienna.
“Brent initially rose on the news, but then struggled to hold gains as markets tried to make sense of the recommendation,” ANZ analysts said in a note Friday.
Russia and nine other non-OPEC partners were scheduled to join the OPEC talks on Friday to formally ratify the deal.
“The 500,000 b/d is barely above the level of over compliance by the group under the current agreement. The devil is likely to be in the detail when it is released later today [Friday],” ANZ analysts added.
The proposal calls for the OPEC+ coalition to meet again in the first week of March to review the deal and extend it, if warranted, through the rest of 2020.
“By then we will have a better understanding of the market’s development and forecasts of summer demand and supply,” Russian energy minister Alexander Novak told reporters Thursday. “We really do see some risks of oversupply in first-quarter connected with seasonal drought of demand.”
Meanwhile, market participants would also be monitoring developments around the ongoing US-China trade dispute with a Phase One deal expected to go through by December 15.
“Markets remain pondering the outcome of the US-China trade talks in the lead up to the December 15 tariffs deadline, seemingly keeping the hopes high going into the Friday session for the Asia region,” Pan Jingyi, IG’s market strategist, said.
As of 0240 GMT, the US Dollar Index was down 0.04% at 97.34.
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–Edited by Norazlina Juma’at, firstname.lastname@example.org