London - Oil prices steadied on Thursday as markets recovered from their initial shock at US President-elect Donald Trump's surprise victory, but investors were cautious ahead of a key OPEC meeting to decide on production.
Most markets shook off post-election losses and bounced back on Thursday.
But the oil market is heavily oversupplied and investors are focusing on a gathering of the Organisation of the Petroleum Exporting Countries on November 30, which may lead to output cuts.
Brent crude was up 10 cents at $46.46 a barrel by 0920 GMT. US light crude was down 10 cents at $45.17.
“If no agreement is reached and some individual members continue to expand their production then the market will remain in surplus throughout the year, with little prospect of oil prices rising significantly higher,” the International Energy Agency (IEA) said in its monthly report on Thursday.
“If the supply surplus persists in 2017 there must be some risk of prices falling back,” the IEA added.
Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt, agreed:
“We are still in an oversupplied market and that is not going to change for the foreseeable future unless OPEC cuts.”
The market was dampened by a 2.4-million-barrel rise in U.S. crude inventories to 485 million barrels last week, reported by the Energy Information Administration on Wednesday.
Investors are still assessing the long-term impact of a Trump presidency on world oil supply and demand.
BMI Research said the billionaire's expected pro oil and gas industry policies might mean US “production of oil and gas could recover at a faster rate in 2017 as developers grow more encouraged”.
Goldman Sachs said a Trump presidency would likely result in higher investment and, in time, increased US oil output as the president-elect has said he would deregulate fossil fuel production.
Internationally, the bank said Trump's threat of renewed U.S. sanctions against OPEC member Iran would “further incentivise Iran to maximise production in the short term rather than comply to an OPEC freeze”.
This reinforced traders' doubts over the ability of OPEC and other producers such as Russia to trim output to prop up prices.
REUTERS