OPEC+ seen sticking to output cut goal, analysts say

LONDON Reuters -- OPEC is expected to stick to its latest goal of reducing oil production by 2 million barrels per day bpd when it meets on Sunday, but analysts believe that crude prices could fall if the group doesn't make further cuts.

Sources say that the likelihood of it leaving policy unchanged is being signaled by the fact that the Organization of the Petroleum Exporting Countries OPEC and its allies led by Russia have switched its planned in-person meeting in Vienna on Dec. 4 to a virtual one.

The group agreed to reduce its oil production target by 2 million barrels per day from November to the end of 2023 in early October. The actual cut the group is expected to deliver is closer to 1 million and 1.1 million barrels per day, due to production restraints on some of the alliance.

After unprecedented demonstrations, OPEC sources told Reuters that the Russian oil-price cap is going to affect the market and give a clearer picture of the oil demand outlook in China, the world's top crude importer.

Some analysts are not ruling out a surprise, and warn that OPEC risks a collapse in the oil price if it doesn't curb its output targets at the meeting.

Stephen Brennock, PVM Oil analyst Stephen Brennock said that a further cut in production can't be ruled out. Failure to do so risks sparking another selling frenzy, he said, without saying how low he thought prices could go.

The price of crude was trading around $88 a barrel on Thursday after Russia invaded Ukraine, but was above a 14 year high above $139 a barrel. The price was close to one-year lows close to $80 a barrel earlier in the week.

The recent weakness of the Chinese economy is weighing on the market with analysts saying that she did not expect OPEC to change its tack despite the European Union failing to agree a level at which to cap Russian oil prices.

Energy Aspects expects the OPEC to return some barrels to the market in the second quarter of next year in order to balance supply and demand.

UBS analyst Giovanni Staunovo said that while there isn't clear on Russian supplies, OPEC may rollover its current quotas, weaker Chinese demand and the potential for new releases from the US strategic petroleum reserve SPR may prompt the group to cut further.