Oil Prices Climb Ahead of OPEC+ Resolves
Global prices of crude oil climb as all eyes are on the decision by members of the Organisation of Petroleum Exporting Countries and allies (OPEC+) resolve on output for 2024.
There are growing expectations that they could make deeper supply cuts, which would be in addition to the rollover of the voluntary cuts from Saudi Arabia and Russia.
This growing expectation leaves downside risk for the market if OPEC+ disappoint later today, ING commodities strategists said in a note on Thursday.
Adding to the uncertainty from the meeting is that it is still not clear if the group has been able to resolve a disagreement over Angolan and Nigerian production targets for next year.
Brent price rose by 0.37% to $83.19 per barrel from the closing price of $82.88 a barrel in the previous trading session on Wednesday.
The American benchmark, West Texas Intermediate (WTI), traded at the same time at $78.23 per barrel, up 0.48% from Wednesday’s close of $77.86 per barrel.
The Organization of the Petroleum Exporting Countries (OPEC) will hold an online meeting at 1 p.m. local time on Thursday ahead of a meeting of the ministers of the 23-member OPEC+ group later in the day to discuss the trajectory of production levels from January 2024 onward.
Producer countries, to keep prices above $80 per barrel, are now expected to announce additional output cuts amid reports of a forecast supply surplus, especially in the first half of next year.
Experts also caution that compliance with the production targets is one of the issues on the ministers’ agenda, with a possible agreement yet to be reached on cutting quotas.
Meanwhile, markets forecast that the US Fed’s final interest rate will be between 5.25 and 5.50% based on expectations that the bank’s two-year hawkish policy cycle will come to an end. This prediction eased demand worries and put upward pressure on oil prices.
The US dollar index also fell from expectations that the Fed could start cutting interest rates in the first half of next year, while also contributing to price increases by making crude purchases more lucrative for holders of other currencies.
However, concerns about an estimated demand weakness in the world’s largest oil consumers, the US and China, limited upward price movements. Nigeria Eurobond Slumps after CBN Resumes OMO Auction
The US Energy Information Administration’s (EIA) data indicated that commercial crude oil inventories in the country increased by around 1.6 million barrels, compared to the American Petroleum Institute’s expectation of a drop of around 817,000 barrels.
According to official data released on Thursday, China’s manufacturing activity contracted for a second straight month in November. China’s official Purchasing Managers’ Index (PMI) fell to 49.4, at a quicker pace than expected.