OPEC set to meet amid doubts around further production cuts

Delegates from the Organisation of the Petroleum Exporting Countries are meeting in Vienna from Thursday with traders wondering aloud whether the cartel and its allies will approval further oil production cuts.

The 14 members of OPEC and a group of allied non-OPEC producers led by Russia (collectively known as OPEC+) are expected to at least keep production cuts at their current level of 1.2m barrels per day (bpd) through to June 2020.

OPEC delegates were scheduled to meet on Thursday with another summit including allied producers, such as Russia and Khazhakstan, set for the following day.

Those output curbs are due to expire in March but there was speculation that the group might opt to cut further if Russia and Saudi agree, although some analysts were skeptical, especially regarding Riyadh's willingness to endure further market share losses.

Yet crude oil futures gained around 4% on Wednesday after Iraq's oil minister suggested that deeper cuts were possible.

In remarks to CNBC, Thamer Ghadban said that production cuts now in place worth 1.2m bpd are “not really that effective.” He said a 1.6m bpd cut would be more effective.

Saudi Arabia will also push for an extension of oil production cuts through mid-2020 in an effort to prop up Saudi Aramco’s initial public offering share price, Persian Gulf officials said, CNBC reported separately.

But for Capital Economics's Fraziska Palmas: "If we are right and OPEC+ simply rolls over its current agreement, there could be a fall in the price of oil. That said, the weakness would probably be short-lived.

"In fact, we expect global economic growth to gradually recover next year and US supply growth to slow sharply, which means current OPEC+ supply cuts should be enough to support a slight recovery in the price of oil next year."

Oil prices were edging lower on Thursday ahead of the meeting. Brent crude futures were down 14 US cents, or 0.22%, to $62.86 a barrel at 8.45am GMT.

West Texas Intermediate (WTI) crude futures were falling by 0.34%, to $58.23 a barrel.