In the global commodities market, the price of Brent crude fell below $78 per barrel due to pressure from a bleak demand forecast. ING commodities strategists stated in a report on Wednesday that even while the oil balance is expected to tighten in the next quarter, oil prices are still under pressure.
The purpose of the Sunday meeting of OPEC+—the Organization of Petroleum Exporting Countries and its allies—was to talk about member nations’ production output.
Nevertheless, despite the June meeting’s OPEC+ supply cut extension, crude oil prices are still declining. The US demand picture worsened as the country’s stockpiles increased.
Brent traded more than 1% lower below $78 per barrel. Analysts said the American Petroleum Institute, API data on US crude oil inventories release is likely to keep pressure on the market in the immediate term.
API data shows that US crude oil inventories rose by 4.1 million barrels over the last week, which was very different to the more than 2 million barrel decline the market was expecting, according to ING.
Cushing crude oil stocks also increased by 1 million barrels, while gasoline and distillate inventories rose by 4m barrels and 2m barrels respectively. The more widely followed weekly EIA report will be released later today.
Analysts said while the market has been disappointed that OPEC+ will gradually unwind cuts, it is important to remember that this is only from October. Our balance sheet continues to show a tightening in the oil market over the third quarter.
The decision from OPEC+ warrants relatively more weakness further along the forward curve but speculative money will be largely positioned in the nearby prompts. The technical also suggest that the oil market is entering oversold territory, ING said.
The Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, met on Sunday to discuss the production output of member countries.
The group’s overall crude oil production in the Declaration of Cooperation will be around 39.72 million barrels per day (bpd) starting Jan. 1, 2025, until Dec. 31, 2025.
Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman met in person in Riyadh on the sidelines of the OPEC+ meeting. The countries decided to prolong the additional voluntary cuts of 1.65 million bpd, announced in April 2023, until the end of December 2025.
Moreover, the countries agreed to extend their additional voluntary cuts of 2.2 million bpd, announced in November 2023, until the end of September 2024. However, the 2.2 million bpd cut will be gradually phased out monthly until the end of September 2025.
Meanwhile, US Secretary of State Antony Blinken held separate phone calls on Sunday with two Israeli ministers to discuss the cease-fire proposal unveiled by President Joe Biden late last week.
Biden appealed to Hamas to accept the deal and urged Israeli Prime Minister Benjamin Netanyahu to resist pressure from members of his governing coalition who are opposed to the plan.
In a separate statement, State Department spokesman Matthew Miller said that in the call with Israeli Defense Minister Yoav Gallant, the Secretary ‘commended Israel’s readiness to conclude a deal and affirmed that the onus is on Hamas to accept.’
Hamas said it would ‘respond positively to any proposal that includes a permanent cease-fire, a full withdrawal (of Israeli forces) from the Gaza Strip, reconstruction efforts, the return of the displaced, and the completion of a comprehensive hostage exchange deal.’
