Oil prices rise on hopes of OPEC+ supply curbs

16 Nov Oil prices rise on hopes of OPEC+ supply curbs

Oil prices rose in early Asian trade on Monday, recouping some losses from the previous session as hopes that OPEC+ will continue to curb output offset concerns of weaker fuel demand amid rising COVID-19 cases and higher production from Libya.

Brent crude futures for January rose 27 cents, or 0.6%, to $43.05 a barrel by 0043 GMT while U.S. West Texas Intermediate crude for December was at $40.48 a barrel, up 35 cents, or 0.9%.

Both contracts gained more than 8% last week on hopes of a COVID-19 vaccine and that the Organization of the Petroleum Exporting Countries (OPEC) and their allies including Russia will maintain lower output next year to support prices.

The group  has been cutting production by about 7.7 million barrels per day, with a compliance rate seen at 101% in October, and had planned to increase output by 2 million bpd from January.

OPEC+ is due to hold a ministerial committee meeting on Tuesday which could recommend changes to production quotas when all the ministers meet on Nov. 30 and Dec. 1.

However, the speedy recovery of oil production in Libya, an OPEC member, back to above 1.2 million bpd presents a challenge to OPEC+ cuts while a slowdown in traffic across Europe and the United States dampened fuel demand recovery hopes this winter.

“European motorway traffic is down almost 50% in recent weeks in some countries (such as France) as lockdown measures are increased,” ANZ analysts said.