Oil dips $1/bbl ahead of OPEC+ meeting, EU Russian oil ban

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By Arathy Somasekhar


HOUSTON (Reuters) -Oil futures slipped by about $1 a barrel in choppy trading on Friday ahead of a meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) on Sunday and an EU ban on Russian crude on Monday.

Brent crude futures were down $1.10 , or 1.1%, at $85.87 per barrel by 1:07 p.m. (1807 GMT). U.S. West Texas Intermediate (WTI) crude futures fell 77 cents, or 0.9%, to $80.47 per barrel.

Both contracts dipped in and out of negative territory, but were on track for their first weekly gains, the biggest in two months at around 2% and 5% respectively, after three consecutive weeks of drops.

"Traders will be hesitant to be short over the weekend if there are growing rumblings that OPEC might try to shock and awe the market at their weekend meeting," said Phil Flynn, an analyst at Price Futures group.

OPEC+ is widely expected to stick to its latest target of reducing oil production by 2 million barrels per day (bpd) when it meets on Sunday, but some analysts believe that crude prices could fall if the group does not make further cuts.

"Crude carries significantly more weekend risk and could be extremely volatile on the open next week," said Oanda analyst Craig Erlam, a view echoed by other analysts.

Russian oil output could fall by 500,000 to 1 million bpd early in 2023 due to the European Union ban on seaborne imports from Monday, two sources at major Russian producers said.

Poland agreed to the EU's deal for a $60 per barrel price cap on Russian seaborne oil, allowing the bloc to move forward with formally approving the deal over the weekend, Poland's Ambassador to the EU Andrzej Sados said.

European Commission President Ursula Gertrud von der Leyen said the Russian oil price cap will be adjustable over time so that the union can react to market developments.

Russian Urals crude traded at around $70 a barrel on Thursday afternoon. The cap was designed to limit revenues to Russia while not resulting in an oil price spike.

Sending bullish signals, China is set to announce an easing of its COVID-19 quarantine protocols within days, sources told Reuters, which would be a major shift in policy in the world's second biggest oil consumer, although analysts warn a significant economic reopening is likely to be months away.

U.S. oil rig count, an indicator of future production remained unchanged this week, according to data from Baker Hughes. [RIG/U]]

Government data also showed that U.S. employers added more jobs than expected in November while average hourly earnings also increased, potentially giving the Federal Reserve more incentive to raise interest rates.

(Additional reporting by Mohi Narayan in New Delhi; Editing by Marguerita Choy and Louise Heavens)

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