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UPDATE 6-Oil flat as OPEC signals deeper output cuts, condensate exclusion weighs

Published 06/12/2019, 05:10 am
© Reuters.  UPDATE 6-Oil flat as OPEC signals deeper output cuts, condensate exclusion weighs
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* OPEC+ panel recommends deepening cuts by 500,000 bpd - Novak

* Panel recommends excluding gas condensate from output figures

* Deeper cuts limited to Q1 of 2020 -Novak

* Global oil supplies set to rise in 2020 (New throughout; updates prices, market activity and comments; changes byline and dateline, previously LONDON)

By Laila Kearney

NEW YORK, Dec 5 (Reuters) - Oil futures were little changed on Thursday, supported by expectations that OPEC will deepen output curbs but pressured by the prospect that gas condensate will be excluded from cuts for non-member producers.

Brent crude LCOc1 futures gained 7 cents to $63.07 a barrel by 12:51 p.m. EST (1751 GMT). West Texas Intermediate (WTI) crude CLc1 futures lost 20 cents to $58.23 a barrel after hitting the highest since late September during the session.

A ministerial panel of key members of the Organization of the Petroleum Exporting Countries and allied producers led by Russia recommended deepening output cuts by 500,000 barrels per day (bpd) in the first quarter of 2020, according to Russian Energy Minister Alexander Novak.

The producer group known as OPEC+, currently has an output reduction level of 1.2 million bpd. crude futures reversed an early rise and Brent pared gains after the ministerial panel also recommended excluding data on gas condensate from oil output figures for Russian and other non-OPEC members.

"That is a way for Russia to compete with the U.S. shale mainstay," said John Kilduff, a partner at Again Capital Management in New York. "So what looked like an aggressive cut may end up being middling when we do the final analysis."

The OPEC ministers gathered on Thursday in Vienna and OPEC+ will meet again on Friday to vote on the extension. OPEC+ group has been curbing output since 2017 to counter surging production from United States, now the world's biggest oil producer thanks to rapid growth in shale oil output.

Next year, rising production in other non-OPEC countries, such as Brazil and Norway, could add to the global surplus.

"We expect a constructive outcome to today's meeting in terms of a prolongation of the deal, but are not yet convinced that a strong bullish surprise with a sizeable adjustment to the target level will really transpire," Vienna-based consultancy JBC Energy said in a note.

OPEC's effort to deepen cuts and increase member compliance was also driven by the group's de facto leader Saudi Arabia's hopes to see higher oil prices to support its budget and initial public offering (IPO) of state-owned Saudi Aramco. Wednesday, oil prices surged on expectations of deeper OPEC cuts and data showing a large drop in U.S. crude inventoris. But nagging worries about the U.S.-China trade war have kept prices roughly where they were a week ago.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ CHART: Brent oil may test support at $62.61

CHART: U.S. oil may retrace to $57.37

GRAPHIC: U.S. petroleum inventories png

https://tmsnrt.rs/35Hre4S OPEC's share of global oil supply shrinks

https://tmsnrt.rs/2NqmZVh

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