LONDON: Brent crude oil on Monday steadied near $80 a barrel since world powers met in Vienna for the final day of talks on Tehran’s nuclear programme and a key meeting OPEC to discuss production on November 27.
The Organization of the Petroleum Exporting Countries is considering how to respond to a collapse in oil prices and may decide to cut its output target when it meets on Nov.27. Fund managers say oil prices could plunge to $60 a barrel if the cartel fails to make significant cuts to reduce an oversupply on world markets.
Brent was trading at $80.25 a barrel at 0920 GMT, down 11 cents. The contract hit a one-week high of $81.61 on Friday. U.S. crude was down 10 cents at $76.41 a barrel. Since June, oil has lost 30 percent in value, with Brent plunging from a high above $115 and U.S. crude from above $107.
“The focus all this week is going to be on Vienna, starting today with the continuation of the negotiations on Iran,” said Petromatrix oil analyst Olivier Jakob. “This will also have an influence over what happens in Vienna in the second part of the week with the OPEC meeting.”
OPEC members Iran, Libya and Venezuela have urged fellow crude producers to support oil prices through production cuts, while Kuwait has said an output reduction is unlikely. Jakob said position of Saudi Arabia, the club’s biggest producer and exporter, which has so far sent mixed messages about a possible cut, could be influenced by the conclusion of the Iran talks on Monday.
“The market would question the credibility of OPEC and its influence on global oil markets if there were no cut,” said Daniel Bathe, of Lupus alpha Commodity Invest Fund. A cut in Chinese interest rates on Friday also underpinned prices, raising expectations that demand could be stimulated in the world’s biggest energy market.
Asian markets rallied on Monday with shares in Shanghai hitting three-year highs as the prospect of further policy stimulus in China and Europe whetted risk appetites globally while sending the euro skidding. “China’s surprise rate cut might provide some initial support to commodities, but weak domestic demand and tight credit conditions will likely continue to weigh on sentiment,” ANZ bank said in a research note.