Oil prices up ahead of OPEC meeting

Oil prices went up on Wednesday, extending 3% gains in the previous session ahead of a meeting of OPEC producers to discuss a big output cut in what energy executives and analysts see as a tightly supplied market.

The price of crude oil LCOc 1 rose 11 cents to $91.91 a barrel at 0001 GMT, after climbing $2.94 in the previous session.

US West Texas Intermediate WTI crude CLc 1 futures picked up 5 cents to $86.57 a barrel after gaining $2.89 in the previous session.

The Organization of the Petroleum Exporting Countries and allies led by Russia are discussing output cuts as big as 2 million barrels per day bpd, according to the OPEC meeting in Vienna later on Wednesday.

That would be the group's biggest production cut since demand was smashed by COVID 19 in 2020.

A reduction in output on this scale would tighten the market, ANZ Research analysts said in a note.

The US is pushing OPEC producers not to go ahead with deep cuts, a source familiar with the matter told Reuters, as President Joe Biden looks to prevent a rise in US gasoline prices.

There would be limited impact on supply from a lower output target, as several OPEC countries are already pumping well below their existing quotas. In August, OPEC missed its production target by 3.58 million barrels per day.

An agreement on big cuts would send a strong message that the group is determined to support the market, ANZ analysts said.

The outlook for demand is clouded by fears of a global recession, and the market is seeing tightening further with European Union sanctions on Russian oil looming in December.

In a note, Commonwealth Bank commodities analyst Vivek Dhar said that the US dollar, global growth concerns and EU sanctions due to take effect on 5 December are the main drivers of oil prices in the short term.