Oil prices slipped on Tuesday amid concerns over mounting supply after leading producers delayed talks on 2021 output policy that could extend production cuts as the coronavirus pandemic continues to sap fuel demand.
Opening trading for December Brent crude was down 20 cents, or 0.4% at $47.68 a barrel by 0136 GMT, after dropping more than 1% on Monday. West Texas Intermediate was down by 27 cents, or 0.6% at $45.07 a barrel, having dropped 0.4% in the previous session.
Still, both contracts surged around 27% in November, the biggest monthly gains since March after COVID-19 vaccine developments raised hopes of an economic recovery that could boost fuel demand.
OPEC+ delayed talks output policy for next year until Thursday, three sources told Reuters, as key players were still in disagreement on how much oil they should pump amid weak demand.
The grouping, including the Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies, had been scheduled to hold its meeting on Tuesday after discussions of key ministers on Sunday failed to reach a consensus.
"I suspect that, ultimately, OPEC+ will extend the production cut programme by three months," said Bob Yawger, director of energy futures at Mizuho Securities. But any accord would require some producers to agree to larger cuts moving forward, with those barrels being allocated to the United Arab Emirates (UEA) "for the balance of the agreement", he added.
Sources said the UAE had complicated the picture by signalling it would be willing to support a rollover of supply cuts only if group members' compliance with cut commitments improved.
The group is due to ease current production cuts by 2 million barrels per day (bpd) from January, but with demand still under pressure from the pandemic, OPEC+ was considering extending current cuts into the first months of next year, a position backed by de facto OPEC leader Saudi Arabia, sources said.
A Reuters poll of 40 economists and analysts forecast Brent would average $49.35 a barrel next year, estimating that prices would have some trouble sustaining a rally.