Oil prices have recovered from recent losses as new OPEC+ actions are discussed

Oil prices rebounded in Asian trade on Thursday after falling to more than five-month lows, as Russian and Saudi leaders met to discuss further "cooperation" on oil prices.

This week, Russian President Vladimir Putin met with Saudi Crown Prince Mohammed bin Salman, and the two are said to have discussed tighter coordination among members of the Organisation of Petroleum Exporting Countries and allies (OPEC+). 

This week, Putin will also meet with leaders of the United Arab Emirates and Iran. 

The meetings come just a few days after OPEC's planned production cuts for 2024 disappointed markets, sending oil prices down. To sustain crude prices, Saudi Arabia and Russia have led the cartel in limiting production through 2023.

However, the most recent OPEC+ conference revealed that other member countries are less enthused about reducing production, owing to the fact that the cuts also bite into national revenue streams. This resulted in OPEC+ announcing less than 1 million barrels per day of further cutbacks in 2024, with the majority of the new cuts also being voluntary. 

Oil prices fell sharply following the summit, reaching their lowest level since early July this week. Prices were also weighed down by rising concerns about dwindling petroleum demand in the coming months, as global economic circumstances deteriorated. 

Brent oil prices for February delivery increased 0.5% to $74.63 per barrel by 20:45 ET (01:45 GMT), while West Texas Intermediate crude futures rose 0.5% to $69.99 per barrel. 

While the OPEC+ cuts were disappointing, they are nevertheless likely to tighten petroleum markets slightly in the first quarter of 2024. Brent is expected to trade in the low $80s in early 2024, according to analysts.  

Concerns about demand are still present.

A spate of negative economic indicators from Asia, the United States, and the European Union has raised fears about sluggish crude consumption in the coming months. 

An unimpressive ADP nonfarm employment data indicated that the U.S. labour market was progressively cooling, while an unusual increase in petrol stockpiles indicated that fuel demand in the world's largest fuel consumer was swiftly decreasing. 

U.S. petrol futures fell to a near two-year low following the inventory report, which also revealed a larger-than-expected decrease in global crude stockpiles in the week ending December 1. 

However, US oil production remained mainly positive, while crude inventories had risen for the sixth week in a row.  

Markets were now waiting for vital Chinese oil import data, which was coming later in the day. A broader focus was also on nonfarm payrolls data in the United States, which is due this Friday.