NEW YORK (MarketWatch) — Oil futures rose Tuesday as traders debated the outcome of Thursday’s closely-watched meeting of the Organization of the Petroleum Exporting Countries.
Nymex WTI crude futures for January delivery CLF5, +0.98% gained 75 cents, or 1%, to $76.53 a barrel. ICE January Brent LCOF5, +0.88% gained 70 cents, or 0.9%, at $80.38 a barrel.
OPEC is expected to debate whether to throttle back production when it meets Thursday in Vienna.The cartel has been exceeding its existing production ceiling of 30 million barrels a day, producing around 30.7 million barrels a day in September, according to the International Energy Agency.
“We have a suspicion that not only will OPEC reduce output 1 million barrels/day at the ... OPEC meeting, but non-OPEC member Russia will join with up to a [500,000 barrel a day] cut for a total as high as 1.5 million barrels a day,” wrote strategists at Stifel in a note.
Other analysts are skeptical of the potential for a big cut, arguing that Saudi Arabia and other OPEC heavyweights appear intent on maintaining market share and are eager to put pressure on higher-cost shale producers in North America.
“Several comments regarding possible production cuts have emerged over past few days but none of them pointed either to a broader agreement among OPEC members on cutting oil production or to a participation of other non-OPEC producers on lowering global oil supply,” wrote strategists at KBC Bank in Brussels.
See: Here’s what OPEC’s big Nov. 27 meeting could mean for oil futures.
Speculation is on the rise that Russia, which is not a member of OPEC but has attended meetings of the cartel as an observer, could cut production. However, the country’s top energy official sounded unenthusiastic about the prospect.
“We are not Saudi Arabia, which has the ability to reduce production quickly, ramp up quickly,” Russian Energy Minister Alexander Novak said in a television interview on Monday, according to Bloomberg.
Oil prices have plunged since midyear on growing global supplies of oil and weak demand growth.
Bulls may take comfort from data that showed the U.S. economy expanded even faster in the third quarter than previously reported, offering further evidence the U.S. entered the final stretch of 2014 on an accelerated track.
Natural gas futures added to Monday’s decline, falling more than 7 cents, or 1.6%, to $4.232 per million British thermal units, pressured by warmer weather in the U.S.
