Oil futures gained Thursday, with U.S. prices moving back above $50 a barrel, as traders looked ahead to a weekend meeting of major crude producers that’s expected to shore up the recent Organization of the Petroleum Exporting Countries’s output pact.January West Texas Intermediate crude gained $1.07, or 2.2%, to settle at $50.84 a barrel on the New York Mercantile Exchange. It lost 2.3% to finish at $49.77 on Wednesday—its lowest level since Nov. 30. February Brent tacked on 89 cents, or 1.7%, to $53.89 a barrel on the ICE Futures exchange in London.
Russian news agency TASS reported Thursday that the Russian energy ministry confirmed that a meeting of OPEC and non-OPEC countries has been set for Dec. 10 in Vienna, after speculation that the gathering would be canceled had fueled some trading volatility. Reuters, citing two OPEC sources, reported that only five of 14 non-OPEC producers have agreed to attend the meeting so far.
Russia’s confirmation helped the market “build a bit of confidence around a more comprehensive deal,” said Robbie Fraser, commodity analyst at Schneider Electric. Added to that, “we’ve seen some renewed conflict in Libya near major oil infrastructure, further highlighting the issues that country will continue to face,” he said.
Tim Evans, energy futures specialist at Citi Futures, also noted that the “rally in prices since the OPEC announcement may also persuade non-OPEC countries that cuts are unnecessary.”
Traders are also waiting to see if OPEC will accept the usual seasonal production declines as a part of non-OPEC production cuts, said Joseph George, who’s also a commodity analyst at Schneider Electric.
OPEC had said that non-OPEC producers agreed to take on a cut of 600,000 barrels to their production, with Russia assuming half of that.
“But where the remainder of the cut comes from is still uncertain,” said George. “News that OPEC may include natural declines, rather than active cuts alone, in order to reach their target pressured prices lower on Wednesday.”
Last week, OPEC members agreed to cut output to no more than 32.5 million barrels a day starting Jan. 1. After rallying sharply in the days before and after the deal was announced, oil prices retreated slightly on skepticism over the cartel’s commitment to follow through on its commitments.