Oil steady as OPEC+ works on compromise on output deal

FILE PHOTO: Flames emerge from flare stacks at Nahr Bin Umar oil field, as a man is seen wearing a protective face mask , following the outbreak of the coronavirus, north of Basra

By Scott DiSavino

NEW YORK (Reuters) – Oil prices held steady on Thursday as the market waited for direction from the OPEC+ producers, including Saudi Arabia and Russia, that are debating whether to increase output from January.

Brent futures rose 16 cents, or 0.3%, to $48.41 a barrel by 11:10 a.m. EST (1610 GMT), while U.S. West Texas Intermediate (WTI) crude rose 6 cents, or 0.1%, to $45.34.

The premiums of front-month Brent and WTI over the same month in 2022, meanwhile, reached their highest since February 2020.

“The market is cautious. Oil prices lost some gains this week as negotiations within the OPEC+ group did not prove to be as smooth as expected,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, a grouping known as OPEC+, are working on an agreement on Thursday on policies for 2021 after talks earlier in the week reached no conclusion on how to tackle weak oil demand amid a new coronavirus wave.

OPEC+ had been widely expected to roll over oil cuts of 7.7 million bpd, or 8% of global supplies, at least until March 2021.

But after hopes for a speedy approval of COVID-19 vaccines spurred a rally in oil prices at the end of November – Brent futures gained 27% in November – some producers questioned the need to tighten oil policy, which is supported by OPEC leader Saudi Arabia.

“It is still expected that the group will come to a deal,” ING Economics said in a note.

Britain approved Pfizer Inc’s COVID-19 vaccine on Wednesday, jumping ahead in a global race to start the most crucial mass inoculation programme in history.

In the United States, crude stockpiles fell last week, while gasoline and distillate inventories rose sharply as refiners slowed production amid weakening demand, the Energy Information Administration said on Wednesday. [EIA/S]

The United States, meanwhile, imposed fresh Iran-related sanctions, blacklisting an entity and an individual as Washington continues to ramp up pressure on Tehran during U.S. President Donald Trump’s final months in office.

(Reporting by Aaron Sheldrick in Tokyo and Julia Payne in London; Editing by Pravin Char, Susan Fenton, Alexander Smith and Barbara Lewis)