Oil eased on Monday, as traders were reluctant to take on big new positions ahead of an OPEC meeting next week, when the exporter group is expected to decide whether to continue output cuts aimed at propping up prices.
Brent crude futures were at $62.37 per barrel by 1002 GMT, down 35 cents on the day, while U.S. West Texas Intermediate (WTI) crude futures were down 7 cents at $56.48 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC), together with a group of non-OPEC producers led by Russia, has been restraining output since the start of this year in a bid to end a global supply overhang and prop up prices.
The deal to curb output is due to expire in March 2018, and OPEC meets on Nov. 30 to discuss the outlook for the policy. The expectation is for the agreement to be extended to cover the whole of next year.
“It is widely believed that OPEC together with 10 non-OPEC countries will roll-over their production for the whole of 2018 although Russia is holding its cards close to its chest,” PVM Oil Associates strategist Tamas Varga said.
OPEC last week forecast demand for its own crude to rise by 460,000 bpd to 33.42 million bpd next year, in contrast with a forecast from the International Energy Agency for a drop of 320,000 bpd to 32.38 million bpd.
“Such a rollover (in the deal) would be bullish if you believe OPEC’s numbers but will not reduce global or OECD stocks if the IEA estimate is closer to reality. Judging by the weekly losses more credit was given to the IEA prediction,” Varga added.
Greg McKenna of futures brokerage AxiTrader said it was “worth noting data showed more longs added by the speculative community”, indicating expectations of rising prices.
This is certainly the case in U.S. crude futures and options, where money managers raised their net long holdings by 28,297 lots to 409,963 contacts, equivalent to nearly 410 million barrels of oil.
In the Brent market, fund managers added 4,793 lots in short positions - more than at any time since late June - but that still leaves the overall net managed money long position at 537,557, within a whisker of the previous week’s record high of 543,069 lots.
In the United States, the number of rigs drilling for new oil production remained unchanged in the week to Nov. 17, at 738, data from oil services firm Baker Hughes showed on Friday.
Oil eases as traders, investors grow edgy ahead of OPEC meeting