Oil drops as market awaits ratification of OPEC+ supply cut

Oil slipped in early Asian trade on Friday, with US crude moving further away from a two-month high after OPEC agreed to increase output curbs in early 2020 but failed to promise further steps after March.

Brent futures were down 21 cents, or 0.3 per cent, at USD 63.18 by 0258 GMT.

West Texas Intermediate oil futures fell 14 cents, or 0.2 per cent, to USD 58.29 a barrel. They hit USD 59.12 a barrel on Thursday, the highest since the end of September.

The Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russia - a grouping known as OPEC+ - agreed to more output cuts to avert oversupply early next year as economic growth stagnates amid the US-China trade war.

The agreement, which needs to be formally adopted later on Friday, will cut an extra 500,000 barrels per day (bpd) of production, through tighter compliance and some adjustments. The group has been withholding 1.2 million bpd and the increased amount represents about 1.7 per cent of global oil output.

The “decision seems to be more of a housekeeping move that will narrow the gap between their current target and the over-compliance we have seen from the alliance,” said Edward Moya senior market analyst at OANDA.