Oil prices gave up earlier gains to end lower on Friday, but still posted its first weekly gain in five, amid hopes the Opec+ alliance of oil producing countries will continue to cap crude output next year to support the market.
Brent, the global benchmark for two thirds of the world's oil, shed 1.03 per cent, or 84 cents, to settle at $80.58 a barrel.
West Texas Intermediate, the gauge that tracks US crude, slid 2.02 per cent, or $1.56, from Wednesday's close to finish at $75.54 a barrel. There was no settlement for WTI on Thursday due to the Thanksgiving holiday in the US.
Oil prices slumped as much as 4.9 per cent on Wednesday after Opec+ surprised the market by postponing its ministerial meeting by four days to November 30.
The meeting is expected to chart the course of crude output cuts next year and discuss any possible changes to the group's long-standing agreement aimed at stabilising the oil market.
“The initial market reaction appeared to suggest traders view this as a lack of unity behind supply cuts going into the new year, but it wasn't long until oil reversed those moves,” said Craig Erlam, senior market analyst at Oanda.
“While there has been more speculation over the day, we may have to wait until the virtual meeting on the 30th to learn just how unified the group remains and whether Saudi Arabia and Russia will need to do any additional heavy lifting."
The 2024 production quotas decided in June included a lower output target for nine of the 23 member countries, which are Russia, Nigeria, Angola, Malaysia, Azerbaijan, Equatorial Guinea, Congo, Brunei and Sudan.
Rystad Energy, which expects oil to trade close to $80 a barrel next year without further supply reductions, said it would be difficult for those countries to accept an lower production quotas.
"Despite the challenges, we still expect Opec+ to reach an agreement to reduce production in the upcoming ministerial meeting. This could involve further voluntary cuts from members such as the UAE, Kuwait and Iraq," Jorge Leon, senior vice president at Rystad, said in a research note this week.
Oil prices, which surged to about $98 in September, are on track for a back-to-back monthly loss amid expectations of a tight crude market in the fourth quarter.
But higher oil production in Iran and the easing of sanctions on Venezuela can ease supply concerns next year.
Iran’s oil production should reach 3.6 million barrels per day by March 20, 2024, Oil Minister Javad Owji was quoted as saying on Tuesday by the Tasnim news agency.
“We aim to reach four million bpd of oil production for next year,” he said.
Meanwhile, the US Federal Reserve will proceed "carefully" and only raise interest rates if progress in controlling inflation is hampered, the minutes of the central bank's latest meeting showed on Tuesday.
"All participants agreed that the committee was in a position to proceed carefully and that policy decisions at every meeting would continue to be based on the totality of incoming information and its implications for the economic outlook, as well as the balance of risks," the minutes said.
The Fed left interest rates unchanged at 5.25 per cent to 5.50 per cent following the conclusion of its October 31 to November 1 meeting. It was the second consecutive meeting in which rates were held steady.
