Oil holds near 2-month high on OPEC+ extension expectations

Market eyes next round of US-China trade talks

LONDON, Nov 23, (RTRS): Oil prices held near twomonth highs on Friday, set for a third consecutive week of gains on expectations of an extension to OPEC+ production cuts, though concern over US-China trade talks continue to hang over the market.

Brent crude futures dropped 17 cents to $63.80 a barrel by 1219 GMT and West Texas Intermediate (WTI) crude futures fell 31 cents to $58.27.

Prices touched their highest since late September on Thursday after Reuters reported that the Organization of the Petroleum Exporting Countries (OPEC) and Russia are likely to extend existing production cuts by another three months to mid-2020 when they meet over Dec 5-6. The group will also emphasise the need for stricter deal compliance from the likes of Iraq and Nigeria.

“A disciplined approach from Iraq and Nigeria should shave off another 300-400,000 barrels per day (bpd) from the group’s production level leading to a balanced market in the first half of 2020 and to a possible supply deficit in the second half,” said oil brokerage PVM.

The current agreement is for a production cut of 1.2 million bpd until the end of March.

Uncertainty over whether the United States and China will be able to reach a partial trade deal that would lift some pressure on the global economy kept a lid on prices. Chinese President Xi Jinping on Friday said his country wants to work out an initial trade pact with the United States and has been trying to avoid a trade war but is not afraid to retaliate when necessary.