VIENNA (Dispatches) - Oil price decreased on Friday as a meeting between OPEC and its allies later in the day is expected on a formal agreement to more output curbs in early 2020.
Despite the new cuts, OPEC stopped short of pledging action beyond March and analysts questioned the impact of the latest curbs, Reuters reported.
Brent futures LCOc1 were down 10 cents, or 0.2%, at $63.29 by 0730 GMT.
West Texas Intermediate oil futures CLc1 fell 7 cents, or 0.1%, to $58.36 a barrel. They hit $59.12 a barrel on Thursday, the highest since the end of September.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia - a grouping known as OPEC+ - agreed on Thursday to more output cuts to avert oversupply early next year as economic growth stagnates amid the U.S.-China trade war.
The agreement will cut an extra 500,000 barrels per day (bpd) of production, through tighter compliance and some adjustments. The group has been withholding 1.2 million bpd and the increased amount represents about 1.7% of global oil output.
"The key question is whether these reported cuts will actually reflect fresh cuts and so help to reduce the surplus in 1Q20, or whether they will just formalize the over-compliance that we have seen from the group as a whole,” ING Economics said in a note.
A panel of ministers representing OPEC and non-OPEC producers led by Russia recommended the cuts, according to Russian Energy Minister Alexander Novak.
Details need to be hammered out at Friday’s OPEC+ meeting in Vienna.
Any price gains from the OPEC+ output cut are likely to benefit American producers not party to any supply curbing agreement. American drillers have been breaking production records even as they cut the number of oil rigs in operation, filling gaps in global supplies.
OPEC countries and allied producers have limited their production since 2017. The current deal removes 1.2 million barrels per day from world markets and is due to expire at the end of March. There is uncertainty over how much longer the coalition can stick together.
Earlier ahead of the meeting, Iran had backed Russia’s request from the Organization of the Petroleum Exporting Countries (OPEC) that oil condensates should not be included in the country’s overall output figures as others suggest Moscow is violating a pact meant to reduce the global supply.
Iran’s Petroleum Minister Bijan Namdar Zangeneh said on Thursday that Russia was rightfully demanding ahead of a meeting with OPEC members and others, a grouping known as OPEC+, that condensates should be excluded from output figures if quotas set by the organization are to be properly respected in the future.
Iran’s ambassador to international organizations in Vienna also said Iran will fully exercise its rights to export oil.
In post on Twitter page of Permanent Mission of Islamic Reoublic of Iran to UN-Vienna on Friday, Iran’s permanent representative to international organizations in Vienna, Kazem Gharibabadi, said Iran will fully exercise its rights to produce and export oil after the illegal sanctions.
"The reduction in quotas should only include Stated who has increased their production,” he said.