Brent, the benchmark for two thirds of the world’s oil, was trading 3.53 per cent higher at $92 a barrel at 6.53pm UAE time on Tuesday. West Texas Intermediate, the gauge that tracks US crude, was up 3.54 per cent at $86.59 a barrel.
Both benchmarks had surged on Monday, their most since May, with Brent advancing by more than 4 per cent and WTI soaring above 5 per cent, after media reports suggested the oil supergroup was considering reducing its output by more than 1 million barrels per day, which would be its largest output cut since the start of the Covid-19 pandemic.
The group's meeting in Vienna on Wednesday is the first in-person gathering since March 2020.
“An in-person Opec+ meeting means get your popcorn ready and prepare for some fireworks,” said Edward Moya, a senior market analyst at Oanda.
“Energy traders are pumping up crude prices ahead of the Opec+ meeting as expectations are high that they will deliver the biggest reduction in output since the beginning of the pandemic.”
Opec+ agreed in the spring of 2020 to cumulatively cut crude production by a record 9.7 million bpd as it faced a pandemic-induced crash in oil prices. The alliance then gradually unwound the cuts over the past two years.
“Despite everything going on with the war in Ukraine, Opec+ has never been this strong and they will do whatever it takes to make sure prices are supported here,” said Mr Moya.
Oil prices have been volatile this year. After shooting up to about $140 a barrel in March following Russia's military offensive in Ukraine, they retreated from early June, dragged down by global recession fears, a strong US dollar, surging inflation and monetary tightening by central banks around the world.
In a research note on Monday, Abu Dhabi Commercial Bank said it expects Opec+ to make a second consecutive output cut at its meeting on Wednesday, given weakening oil demand and mounting concerns of a global recession.
“We see potential for a 1 million barrel a day production cut for November, from October levels,” ADCB economists Monica Malik and Thirumalai Nagesh said.
“With Brent crude trading below $90 per barrel, we think Opec+ is likely to front-load output cuts rather than making a gradual adjustment. However, the actual output reduction is likely to be lower than the planned cut, given the supply constraints,” Ms Malik and Mr Nagesh said.
While a global economic slowdown and recession fears may contain the rally of oil prices, there are factors that provide upward support, said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
"The gas to oil switch increases demand for oil, the US will stop selling its strategic reserves, European measures to cap Russian oil price will likely hit the Russian oil output, and we have not heard more about a nuclear deal with Iran," she said.