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US crude settled lower amid OPEC speculation

Oil
Lucy Nicholson | Reuters

U.S. oil settled lower as traders and investors speculated OPEC producers might surprise with an output cut above what market players expect when the producer group meets this week.

A extension to Iran's nuclear talks, which maintains Western sanctions preventing Tehran from freely exporting its oil, also limited the market's downside, traders said.

Last week, oil prices notched their first weekly gain in two months. On Monday, benchmark Brent crude oil's front-month contract was last down 54 cents at $80 a barrel , trading between a session low of $79.75 and high of $80.85.

U.S. crude futures for settled 73 cents lower at $75.78

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Ministers from the Organization of the Petroleum Exporting Countries meet on Nov. 27, and may decide to cut output to support prices which have fallen about 30 percent since June on fears of oversupply.

Russia, which needs higher oil prices to support its economy, tried on Monday to sway OPEC to slash production, suggesting Moscow could cut its own crude output by about 300,000 barrels per day.

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"Compared to a week ago, there's more speculation now of an higher-than-expected OPEC production cut," said Phil Flynn, analyst at Price Futures Group in Chicago.

"If you were oversupplied by 2 million bpd and you were planning to going to cut just 1 million, it would not have changed the situation much. But if the Russians came on board with another 300,000 bpd, then, yes, it would help."

With the OPEC meeting falling on U.S. Thanksgiving, some New York-based crude traders said they were likely to work a full day despite the holiday.

Read MoreOPEC won't cut production to stop oil slide: Pros

"It's the biggest OPEC meeting we're having since the 2008/2009 crisis, and I'm going to be on the desk all day Thursday," said Tariq Zahir, managing member of Tyche Capital Advisors in Laurel Hollow, New York.

Fund managers say oil prices could plunge to $60 a barrel if OPEC fails to make significant cuts.