Oil prices edged up amid low trading volume on Thursday, ahead of an OPEC meeting in Vienna at which producers are expected to extend a supply-cut deal that came into effect in January with the goal of tightening supplies and propping up prices.

 

The Organization of the Petroleum Exporting Countries (OPEC) will be meeting at its headquarters in the Austrian capital, along with ministers from other oil producing countries, most importantly Russia.

 

OPEC is scheduled to hold an open session, including media, at 10 a.m. (0900 GMT) in Vienna on Thursday, before going into a closed session at noon, according to a tentative program on OPEC’s website. Non-OPEC ministers are set to join at 3 p.m., followed by a joint press conference after the meeting.

 

Traders said trading volumes were low ahead of the meeting.

 

Brent crude oil futures for February, the international benchmark for oil prices, were at $62.84 a barrel at 0704 GMT, up 31 cents, or 0.5 percent, from their last close. The front-month January contract expires today.

 

U.S. West Texas Intermediate (WTI) crude futures were at $57.50 a barrel, up 20 cents, or 0.4 percent.

 

While there has not been an official statement, OPEC and Russia seem ready to prolong their oil supply cuts until the end of 2018. The cuts were put in place last January and are set to expire next March.

 

“If OPEC extends without any caveats, then price may slowly edge higher,” said Oystein Berentsen, managing director for crude trading at Strong Petroleum in Singapore.

 

However, an extension may include a review in June should healthy demand amid ongoing supply restraint overheat the market.

 

“The current consensus is that members will agree on an extension to the production cuts but the duration of the extension is uncertain,” said William O‘Loughlin, investment analyst at Rivkin Securities.

 

ANZ bank said “anything less than a nine-month extension to the current production agreement could see the recent sell-off accelerate.”

 

SOARING U.S. PRODUCTION

 

One of OPEC’s biggest concerns is rising output in the United States, largely due to shale drillers who are fast gaining global market share and are undermining the producer club’s efforts to tighten the market.

 

U.S. oil production hit a new record of 9.68 million barrels per day (bpd) last week, according to government data released on Wednesday. [EIA/S]

 

Rystad Energy, a consultancy, said it expects U.S. oil production to reach 9.9 million bpd in December.

 

That would bring U.S. output close to levels of top producers Russia and Saudi Arabia.

 

Despite this, U.S. crude inventories are down by 15 percent from their March record, to 453.7 million barrels.

 

That is below levels at this time in 2015 and 2016, although above five-year averages.

 

U.S. crude stockpiles fell by 3.4 million last week, the Energy Information Administration said on Wednesday. Gasoline and distillate stockpiles both rose more than anticipated.

 

Traders said the fall in inventories was largely down to a two-week interruption of the Keystone pipeline bringing Canadian crude to the United States, which has now been resolved, and as American companies increasingly export excess crude.