Oil futures edged higher on Monday, extending gains on prospects of OPEC+ deepening supply curbs to prop up prices, which have declined for four weeks as supply disruptions in the Middle East eased due to the Israel-Hamas conflict.
Brent crude futures were up 57 cents, or 0.7%, to $81.18 a barrel by 0400 GMT, while West Texas Intermediate crude was up 51 cents, or 0.7%, to $76.40 a barrel. The front-month December contract expires later on Monday, while January futures climbed 55 cents, or 0.7%, to $76.59 per barrel.
Both contracts closed 4% higher on Friday after three OPEC+ sources told Reuters that the producer group, comprised of the Organisation of the Petroleum Exporting Countries and their allies, including Russia, will evaluate whether to impose more oil production cutbacks when it meets on Nov. 26.
Oil prices have fallen by nearly 20% since late September, with Brent and WTI prompt inter-month spreads slipping into contango last week. In a contango market, prompt prices are lower than future months' prices, indicating ample supply.
"Our statistical model of OPEC decisions suggests that deeper cuts should not be ruled out given the fall in speculative positioning and in timespreads, and higher-than-expected inventories," analysts at Goldman Sachs wrote in a note.
The bank's baseline projection states that the current collective production restrictions would continue in full until 2024 and that Saudi Arabia's unilateral cut of one million barrels per day will be prolonged into the second quarter of 2025 before being gradually restored starting in July.
WTI prices may rise to $80 a barrel, according to IG analyst Tony Sycamore, if OPEC+ decides to announce further significant cuts at their next meeting. However, a decline below $72 will motivate the Biden administration to replenish the US Strategic Petroleum Reserve.
"All of which suggest that a rebound in prices is likely in the first half of this week," he added.
Investors are also watching for a disruption in the trade of Russian crude oil following the sanctions imposed by Washington on three ships that were transporting Sokol crude to India.
Moscow loosened its export prohibition on petrol on Friday, potentially increasing the amount of the motor fuel available globally. This comes after last month, when Russia lifted the majority of its export prohibitions on diesel.
In the Middle East, despite intense fighting, American and Israeli officials suggested that an agreement to release some of the captives held in the beleaguered Gaza enclave was getting closer.
According to energy services company Baker Hughes on Friday, U.S. energy companies added oil and gas rigs last week for the first time in three weeks. The count of oil and gas rigs is a leading predictor of future output.