Prior to the rescheduled meeting of the Organization of Petroleum Exporting Countries (OPEC) and its allies (OPEC+) for November 30, petroleum prices throughout the world gradually increased after dropping below $80 per barrel.
From the closing price of $79.87 per barrel on Monday of the previous trading session, the price of Brent increased by 0.79% to $80.50 per barrel. West Texas Intermediate (WTI), the benchmark for the United States, was up 0.81% from Monday’s closing price of $74.86 per barrel to $75.47 per barrel at the same time.
Oil prices are still impacted by supply uncertainty in the world’s oil markets. The OPEC+ members’ meeting that was originally scheduled for November 26 in Vienna has been rescheduled until November 30.
Bizwatch Nigeria reported that there was a dispute among OPEC+ members over production quotas for 2024. The group is expected to determine its production quotas to be imposed from January onward.
Since 2022, the group has collectively agreed to cut about 5 million barrels of production daily, but the pledge to reduce output has failed to reduce supply excesses on the global market.
If OPEC+ production cuts continue, the average global oil supply is expected to reach 102.8 million barrels per day. Despite production reductions, this represents a surplus of almost 1.3 million barrels per day, the International Energy Agency said in its latest analysis.
Additionally, investors are closely following US Fed officials’ statements for further insight into the world’s biggest oil consumer’s interest rate policy. Analysts are awaiting macroeconomic data from the US, scheduled for later in the day.
Meanwhile, supply-side concerns slightly eased after Hamas and Israel initiated a prisoner exchange and a four-day humanitarian break with an additional two-day extension.
The oil market came under further pressure yesterday despite growing reports that Saudi Arabia is pressing the broader OPEC+ group to agree to deeper supply cuts when they meet on Thursday.
ICE Brent settled just below US$80 as the market increasingly focuses on a looser oil balance early next year. The extension of additional voluntary cuts from Saudi Arabia should erase most of the surplus expected in 1Q24, ING commodities strategists said in a Tuesday note.
However, if OPEC+ want to provide more solid support to the market and ensure that we do not see stocks building early next year, they will need to agree on deeper and broader when it cuts. Nigeria Eurobond Slumps after CBN Resumes OMO Auction
The Saudis and OPEC+ have made a habit of surprising markets in recent years come to their meetings. However, with aggressive cuts already in place, it does leave one wondering the degree to which the group could surprise the market with deeper-than-expected cuts.
Elsewhere, European natural gas prices came under further pressure yesterday with TTF settling more than 5.7% lower on the day.
