By Karolin Schaps
LONDON: Oil prices rose on Monday as investors took positions ahead of an OPEC meeting this week despite expectations that the producer group will not change its output policy.
Brent crude, the global oil benchmark, was trading up 48 cents at $45.34 a barrel at 1157 GMT. US crude futures were 32 cents higher at $42.03 per barrel.
Nevertheless, both contracts are set to end November some 7-9 percent lower as a global supply glut shows no sign of diminishing.
Preparing for Friday’s the Organization of the Petroleum Exporting Countries (OPEC) policy decision, oil traders strengthened their positions to prepare for any unexpected outcomes.
“We see a lot of positioning ahead of the OPEC meeting at the end of the week. That is sparking a lot of interest,” said Michael Poulsen, oil analyst at Copenhagen-based Global Risk Management.
OPEC is determined to keep pumping oil vigorously despite the resulting financial strain even on the policy’s chief architect, Saudi Arabia, alarming weaker members who fear prices may slump further towards $20.
Any policy U-turn would be possible only if large producers outside the exporters’ group, notably Russia, were to join coordinated output cuts.
OPEC and Russia could make “some sort of co-ordinated attempt to reduce production”, said Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance.
“The glut continues, but I do feel that it could be reversed quite quickly given the change in interest rates in the United States, which would indicate more demand.”
The OPEC meeting should also include discussions about new supply from Iran, according to analysts at Morgan Stanley.
Iran, once the second-largest OPEC producer after Saudi Arabia, hopes to raise its crude exports by as much as 1 million barrels per day within months once sanctions aimed at its nuclear programme are eased.
Iran on Saturday offered about 50 oil and gas projects to be developed by foreign investors with local partners.
On Monday, Reuters will publish its monthly oil price poll and its OPEC oil production survey, giving an indication of market consensus on the way ahead.
The end of the U.S. Thanksgiving holiday period will also mean a return to the market of U.S.-based investors, a factor that will likely increase trading volatility later on Monday, Global Risk Management’s Poulsen said.
Traders will also be watching for the U.S. non-farm payrolls report due on Friday. A strong jobs report could seal the case for an interest rate hike at the U.S. Federal Reserve’s Dec. 15-16 meeting and give an indication of the health of the economy.
Other events this week include the European Central Bank meeting on Thursday where economists polled by Reuters expect the ECB to announce monetary policy easing measures.
AFP
