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Oil little changed as OPEC+ decision awaits, Black Sea storm disrupts supplies

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By Yuka Obayashi and Muyu Xu

TOKYO/SINGAPORE (Reuters) – Oil traded in a narrow range on Wednesday as investors turned cautious ahead of a crucial OPEC+ meeting to decide production policy in the coming months, while that a supply disruption in the Black Sea provided a floor for prices.

Brent crude futures fell 3 cents to $81.65 a barrel by 0338 GMT. U.S. West Texas Intermediate (WTI) crude futures gained 12 cents, or 0.2%, to $76.53 a barrel.

Both benchmarks gained about 2% on Tuesday on the possibility that the Organization of the Petroleum Exporting Countries and its allies such as Russia (OPEC+) will extend or deepen supply cuts, as well as concerns about the Kazakh oil production and a weaker US dollar.

“Investors covered their short positions ahead of the OPEC+ meeting due to concerns over supply disruption from Kazakhstan,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.

“All eyes are on OPEC+ policy and the demand outlook towards the end of this year, but WTI is expected to hover around $76, with a range of $5 each above and below, for some time, unless OPEC+ significantly increases production cuts,” he said.

OPEC+ is due to hold an online ministerial meeting on Thursday to discuss production targets for 2024, after postponing the November 26 meeting.

Negotiations will be difficult and a rollover of the previous deal is possible rather than deeper production cuts, four OPEC+ sources said.

“If OPEC+ fails to reach a preliminary agreement, we cannot rule out the risk that the meeting could be further delayed, which would likely put some downward pressure on oil prices,” said Warren Patterson and Ewa Manthey, analysts at ING bank. , in a note to customers.

“The outlook for the oil market in 2024 will largely depend on OPEC+ policy.”

The premium on first-load Brent contracts over six-month-load ones rose to its highest level in two weeks, suggesting rising concerns over long-term supply shortfalls.

A severe storm in the Black Sea region disrupted up to 2 million barrels per day (bpd) of oil exports from Kazakhstan and Russia, according to state authorities and port agent data , fueling concerns about a short-term supply shortage.

Kazakhstan’s largest oil fields have reduced their combined daily oil production by 56% compared to November 27, the Kazakh Energy Ministry announced.

Oil also benefited from a weaker dollar and a drop in U.S. crude inventories.

The dollar was languishing near a three-month low against its major peers on Wednesday, as expectations grew that the Federal Reserve could begin cutting rates early next year.

A weaker dollar generally supports oil prices because it makes oil cheaper for those who hold other currencies.

Meanwhile, U.S. crude oil inventories fell by 817,000 barrels last week, according to market sources citing figures from the American Petroleum Institute.

Eight analysts polled by Reuters estimated on average that crude inventories fell by about 900,000 barrels in the week to Nov. 24. Weekly U.S. government inventory data is due Wednesday.

(Reporting by Yuka Obayashi and Muyu Xu; editing by Lincoln Feast and Kim Coghill)

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