Oil prices have gained marginally after reports of lower crude supplies from Saudi Arabia set to start next month negated the impact of the ongoing high output from prominent exporters, including the US.
The reports of Saudi Arabia's September export cuts pushed prices up slightly today, with WTI trading at US$49.54 and Brent at US$52.43 a barrel at 7:20 AM EDT.
OPEC is trying to end the global supply glut by cutting supplies, but cash-poor members fear losing market share to the USA and Canada, leaving Saudi Arabia to do much of the heavy lifting.
OPEC and 10 producers outside the cartel-including Russia-agreed late past year to cap their production at around 1.8 million barrels a day lower than peak October 2016 levels.
OPEC officials have said the objective of the two-day gathering, which wraps Tuesday, is to discuss ways to improve compliance level to the deal, which went into effect in January in hopes of reducing historically high global stockpiles of crude. The issue has been particularly "a struggle for Iraq lately", said Saxo's Hansen.
"The reality is OPEC has no way of enforcing the production caps", said Gao Jian, an analyst at SCI International.
Also expected to be high on the agenda is the possible inclusion of Libya in the output-cap effort. The African supplier was given a pass when the deal was first forged last fall considering its oil facilities had been under militant attacks for months, sharply curtailing production. Separately, the Kingdom said it would pressure other OPEC members to improve their compliance rate with the deal, but there is still the question of Libya and Nigeria, both exempt from the cuts, which are ramping up their oil output at a respectable rate.
"We continue to see stronger third-quarter seasonal demand as more than enough to offset recent production increases and still draw down inventories to at least some degree", said Tim Evans of Citi Futures.
The US Energy Information Administration, part of the Energy Department, will release its weekly petroleum status report at 1430 GMT on Wednesday, giving details on stockpiles and refinery runs. Natural gas for September delivery rose 1.6 cents, or 0.6%, to $2.816 per million British thermal units.