Oil Steadies Ahead of OPEC+ Producers Meeting on Supply Policy

Oil prices remained stable at the start of trading, as the market awaits an OPEC+ meeting on Monday to review production strategies in light of rapidly changing market conditions.

Futures in New York hovered around $76 per barrel, following a sixth consecutive weekly gain recorded on Friday. The coalition, which includes significant producers such as Saudi Arabia and Russia, may need to contemplate increasing output in November beyond the initially planned increase of 400,000 barrels per day, according to various industry experts and traders. OPEC’s own forecasts suggest that demand will surpass supply in the coming months.

The recent tightening of the market can be attributed to a strong recovery in demand as economies rebound from the pandemic, coupled with supply disruptions in the Gulf of Mexico caused by Hurricane Ida. With winter approaching, the surge in prices has raised concerns about increased consumption of oil products, particularly diesel, for power generation.

The oil market has adopted a bullish tone due to these tight conditions. The prompt timespread was recorded at 78 cents per barrel in backwardation, indicating that near-term contracts are trading at a premium compared to later-dated ones. This is a notable increase from 56 cents observed at the beginning of last month.