NEWS

U.S. oil prices settled lower for the first time in four sessions Monday, as some traders expressed doubt over an extension to a production-cut deal at the OPEC meeting later this week.

Still, prices for the U.S. benchmark crude finished off the session’s worst levels, finding some support after a report that oil workers in Brazil are set to strike later this week. Oil labor union workers approved a strike starting Wednesday, Phil Flynn, senior market analyst at Price Futures Group said, citing a report from Bloomberg. The strike “may not even happen,” but the news still helped oil trade off the day’s “correction low,” said Flynn.

January West Texas Intermediate crude fell by 84 cents, or 1.4%, to settle at $58.11 a barrel on the New York Mercantile Exchange after tapping a low of $57.55.  On Friday, the U.S. benchmark shot up 1.6% to $58.95, settling at a level not seen since June 30, 2015. January Brent oil meanwhile, settled little changed, down 2 cents at $63.84 a barrel on the ICE Futures Europe exchange.

WTI crude prices have been driven higher in recent sessions as U.S. inventory data showed crude stockpiles falling and on disruption to the Keystone pipeline in the U.S. after an oil spill in South Dakota. But the recent rise in prices, with WTI touching two-year highs, could provide incentive for U.S. producers, in particular, to further boost output.

For now, investors are looking ahead to Thursday’s meeting in Vienna of members of the Organization of the Petroleum Exporting Countries and nonmember oil producers, including Russia. Some expect the gathering will produce an extension to the output-cut deal announced in January. But “OPEC and Russia may not reach a conclusion on whether to extend supply cuts beyond March’s deadline until February,” said Adrienne Murphy, chief market analyst at AvaTrade. “The cartel aims to collect as much data possible, as well as appease reluctant Russia, before it commits to more cuts.” And in a note to clients on Monday, analysts at Barclays warned that investors may be focusing on the wrong issue when it comes to the meeting.

“We expect a six- or nine-month extension of the OPEC deal to be agreed to on November 30, but the extension length is less important than the quota level,” said Michael Cohen, head of energy research at Barclays, and his team. “Whether or not the countries extend and the duration of the deal are not the relevant questions in our view. We believe the level of the cut is what really matters, and we assign a low likelihood to this detail being announced on November 30,” he said in a note. Cohen added that the meeting is unlikely to come up with any clarity on production levels for next year, which could mislead some investors into thinking that cuts will remain intact. Barclays analysts do not expect those production levels to remain “static” in 2018.