Oil edged higher after a string of losses as the market weighed the possibility of deeper output cuts from OPEC+.

Brent crude traded near US$81 a barrel, reversing losses from previous sessions, with prices effectively treading water before a meeting of the producer group later in the week. OPEC+'s de-facto leader Saudi Arabia has asked other members to reduce their production quotas to shore up markets, although some members are resisting, delegates said.

“There will be no getting away from OPEC this week,” said Tamas Varga, an analyst at brokerage PVM. “Barring any negative surprise, the recent drop in prices will probably be viewed as a buying opportunity, especially if further cuts are agreed.”

Crude has dropped by around a fifth since late September due to plentiful supplies and concerns about the global economic backdrop, putting pressure on the 23-nation alliance to intervene at its online meeting Thursday. The International Energy Agency warned earlier this month that markets would move back into surplus next year amid a dramatic slowdown in demand growth.

A Bloomberg survey of traders and analysts late last week showed about half of respondents expect OPEC+ to take further measures to tighten the market. If the alliance doesn't announce an additional cut of about 1 million barrels a day on top of curbs from Saudi Arabia, prices could sink to the low US$70s per barrel, according to analysts at Eurasia Group led by Raad Alkadiri.

Reflecting the weakness, hedge funds have turned less bullish on crude. Money managers slashed combined net-long Brent and WTI positions to the lowest since late June, the latest weekly data from ICE Futures Europe and the CFTC running to Nov. 21 showed. Oil options skews have also been signaling bearish put biases, while widely watched timespreads have also eased.

Prices:

• Brent for January settlement rose 1.2 per cent to US$80.94 a barrel at 10:12 a.m. in London.
• WTI for January delivery increased 1.3 per cent to US$75.84 a barrel.