As members of the Organization of the Petroleum Exporting Countries (OPEC) and allies (OPEC+) got ready for a meeting later this week, oil prices dropped below $80 per barrel early on Monday.
Due to Angola and Nigeria’s demands for a larger output allotment, the meeting was postponed. June saw the reduction of both nations’ quotas due to their inability to pump enough oil to reach their targets.
The disagreement over output limitations for the upcoming year increased supply uncertainty in the first quarter of 2024, coinciding with forecasts of rising demand.
After ending at $80.48 a barrel on Friday, Brent’s price today is $79.81, down 0.83% from the previous trading session. The American benchmark, West Texas Intermediate (WTI), traded at the same time at $74.90 per barrel, down 0.84% from Friday’s close of $75.54 per barrel.
Brent oil fell below Saudi Arabia’s floor price of $80 a barrel, raising the possibility of a rollover of the current production cuts or a further increase to these levels.
Saudi Arabia has been imposing an output cut of approximately 1.5 million barrels per day (bpd) that will continue until the end of the year, on top of its contribution to the group’s joint cut of 2 million bpd to extend until the end of 2024.
If OPEC+ production cuts continue, the average global oil supply is expected to reach 102.8 million barrels per day over that time. Despite production reductions, this represents a surplus of almost 1.3 million barrels per day.
Uncertainty in the market has further intensified after the group’s decision to postpone its much-anticipated meeting by four days, from Nov. 26 to Nov. 30, when decisions are expected over the production quotas to be imposed from January onwards.
There are divisions in the organization because some members want to expand production in response to forecasts of a rise in demand in the first quarter of next year. IPPIS: FG to Delist Unverified Workers on Oct. 27
Investors are now monitoring the statements of US Fed officials to seek direction about the next interest rate decision of the world’s largest economy, the US. Market players will also follow macroeconomic data from China.
