Oil prices inched up on Wednesday extending 3% gains in the previous session ahead of a meeting of OPEC+ producers to discuss a big output cut in what energy executives and analysts see as a tightly supplied market.
Brent crude rose 11 cents to $91.91 a barrel at 0001 GMT, after climbing $2.94 in the previous session.
U.S. West Texas Intermediate crude futures picked up 5 cents to $86.57 a barrel after gaining $2.89 in the previous session.
The Organization of the Petroleum Exporting Countries and allies led by Russia, together called OPEC+, meeting in Vienna later on Wednesday, are discussing output cuts as big as 2 million barrels per day (bpd), an OPEC source told Reuters.
That would be the group’s biggest production cut since demand was smashed by Covid-19 in 2020.
“A reduction in output on this scale would significantly tighten the market,” ANZ Research analysts said in a note.
The United States is pushing OPEC+ producers not to go ahead with deep cuts, a source familiar with the matter told Reuters, as President Joe Biden looks to prevent a rise in U.S. gasoline prices.
The real impact on supply from a lower output target would be limited as several OPEC+ countries are already pumping well below their existing quotas. In August, OPEC+ missed its production target by 3.58 million bpd.
However an agreement on big cuts “would send a strong message that the group is determined to support the market,” ANZ analysts said.
While the market is seen tightening further with European Union sanctions on Russian oil looming in December, the outlook for demand remains clouded by fears of a global recession.
“The U.S. dollar, global growth concerns and EU sanctions due to take effect on 5 December all remain crucial drivers of oil prices in the short term,” Commonwealth Bank commodities analyst Vivek Dhar said in a note.