Oil rose above $81 a barrel in London as traders are waiting to see whether the Organization of the Petroleum Exporting Countries+ (Opec+) alliance led by Saudi Arabia will intervene to bolster prices.
Brent crude futures rose 0.7 per cent after rallying 4.1 per cent on Friday amid reports that Saudi Arabia and its allies could deepen production cuts when they gather next weekend. A Bloomberg gauge of the US dollar is heading for its lowest close since late August, making commodities more attractive.
Crude futures are down this year following a run of four weekly losses, as the war-risk premium generated by the Israel-Hamas war fades away, and concerns escalate over robust supplies from outside the Opec+ coalition.
With inventories swelling in the US and timespreads signaling weaker conditions, hedge funds have slashed their bets on oil to the least bullish in 20 weeks.
To shore up sentiment, the Organization of Petroleum Exporting Countries and its allies are expected to at least reaffirm existing production quotas for 2024. Group leader Saudi Arabia is widely predicted to extend an extra 1 million barrel-a-day cutback into early next year.
“We continue to expect that Saudi Arabia and Russia will roll over their additional voluntary cuts into early 2024,” said Warren Patterson, head of commodities strategy for ING Groep NV. “However, what is less clear is whether the broader Opec+ group will make further cuts.”
In the West Asia, meanwhile, shipping risks were in focus after a Japanese-chartered vessel was seized in the Red Sea by Iran-backed Houthi rebels. Tokyo-based Nippon Yusen KK said the Galaxy Leader, a vehicle carrier, was taken in the southern part of the waterway on Sunday.