Benchmark oil prices are little changed during morning trading on Tuesday, and the day before, quotes fell to their lowest levels since mid-November on fears that OPEC+ countries will not fully comply with their commitments to reduce production.
The price of February futures for Brent on the London ICE Futures exchange by 7:10 a.m. was $78.03 per barrel, which corresponds to the level at the close of the previous session. The day before, these contracts fell in price by $0.85 (1.1%) to $78.03 per barrel.
Quotes for January futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) by this time increased by 5 cents to $73.09 per barrel. At the end of the previous session, they fell by $1.03 (1.4%) to $73.04 per barrel.
On Monday, both brands ended trading at their lows since November 16.
Last week, some OPEC+ countries announced a voluntary reduction in oil production by 2.2 million barrels per day in the first quarter of 2024. The reduction in production by OPEC+ will ensure a balance in the oil market in the first quarter of next year, but without further measures in the second quarter, the global market may experience a surplus of 1 million bpd, Citi analysts fear.
In addition, the fact that the oil production restrictions are voluntary raises skepticism about compliance with the terms of the agreement, the analysts added.
Benchmark oil prices are moderately falling on Friday morning after a sharp decline on Thursday, as investors continue to assess the outcome of the OPEC+ ministerial meeting held the day before.
The price of February futures for Brent on the London ICE Futures exchange at 7:14 a.m. is $80.63 per barrel, which is 23 cents lower than at the close of the previous session. The day before, these contracts fell by $2.02 (2.4%) to $80.86 per barrel.
Quotes for January futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) by this time fell by 4 cents to $75.92 per barrel. At the end of the previous session, they fell by $1.9 (2.4%) to $75.96 per barrel.
OPEC+ did not change the official quotas following the meeting that ended the day before, while some countries of the group will voluntarily reduce production by 2.2 million barrels per day in the first quarter of 2024. Saudi Arabia will reduce production by 1 million bpd, Iraq – by 223 thousand bpd, UAE – by 163 thousand bpd, Kuwait – by 135 thousand bpd, Kazakhstan – by 82 thousand bpd, Algeria – by 51 thousand bpd, Oman – by 42 thousand bpd.
Russia will extend and deepen its existing export restrictions. Until the end of 2023, there will be a 300 thousand bpd restriction on the export of oil and oil products compared to May-June 2023. The Russian authorities have announced that the country will increase this reduction by another 200 thousand bpd to 500 thousand bpd and extend it to the first quarter of 2024, while oil supplies will be reduced by 300 thousand bpd and oil products by 200 thousand bpd.
“Initially, oil prices jumped on the news of the extension and deepening of oil production cuts, but investors are worried about OPEC’s compliance with the terms of the deal, as well as about the growth in global fuel demand,” wrote Rob Hayworth, Chief Strategy Officer at U.S. Bank Asset Management Group.
Benchmark oil prices do not show a single trend on Thursday morning, as traders assess data on US stockpiles and await the OPEC+ ministerial meeting.
The price of January futures for Brent on the London ICE Futures exchange at 7:00 a.m. was $82.95 per barrel, $0.15 (0.18%) lower than at the close of the previous session. The day before, these contracts rose in price by $1.42 (1.7%) to the highest since November 6 at $83.1 per barrel. They will expire at the close of the market on Thursday.
February futures, which are more actively traded, are rising in price by $0.16 (0.19%) to $83.04 per barrel.
Quotations for January futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) by this time increased by $0.18 (0.23%) to $78.04 per barrel. At the end of the previous session, they rose by $1.45 (1.9%) to the highest since November 14 at $77.68 per barrel.
Commercial oil reserves in the United States last week increased by 1.609 million barrels, according to the weekly report of the country’s Energy Ministry published on Wednesday. This came as a surprise to analysts who had forecast an average decline of 933 thousand barrels, according to Trading Economics.
Gasoline reserves increased by 1.764 million barrels, and distillate reserves by 5.217 million barrels. On average, experts had expected an increase in gasoline stocks by 229 thousand barrels and a decrease in distillate reserves by 394 thousand barrels.
For their part, the OPEC+ ministers will try to meet again on Thursday (this time online) to review their strategy in the oil market. A face-to-face meeting of the countries participating in the agreement was scheduled for last Sunday, but was postponed a few days later.
Benchmark oil prices are little changed on Wednesday morning, as investors await a meeting of OPEC+ ministers.
The price of January futures for Brent on the London ICE Futures exchange at 7:15 a.m. is $81.68 per barrel, the same as at the close of the previous session. The day before, these contracts rose in price by $1.70 (2.1%) to $81.68 per barrel.
Quotes for January futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) by this time increased by 15 cents to $76.56 per barrel. At the end of the previous session, they rose by $1.55 (2.1%) to $76.41 per barrel.
The meeting of OPEC+ ministers will be held online on November 30, although it was originally planned to hold the meeting in person in Vienna on November 26.
The future direction of oil prices largely depends on whether OPEC+ can “demonstrate continued unity within the group and commitment to stabilizing oil prices in the long term,” Sevens Report Research analysts wrote.
The OPEC+ countries are likely to extend the existing oil production restrictions with minimal changes until the end of the first quarter of 2024, according to Citi analysts. They estimate the probability of maintaining production at the same level at 60-70%, large-scale reductions in fuel supplies at about 20%, and an increase in production at 10-20%.
In addition, investors are studying signals about changes in energy reserves in the United States. According to the American Petroleum Institute (API), last week the US reserves decreased by 817 thousand barrels.
Official data from the US Department of Energy will be published at 17:30 on Wednesday.
Benchmark oil prices are moderately rising on Tuesday morning after declining a day earlier.
The price of January futures for Brent on the London ICE Futures exchange at 9:55 a.m. is $80.08 per barrel, which is 10 cents higher than at the close of the previous session. On Monday, these contracts fell by 60 cents (0.7%) to $79.98 per barrel.
Quotes for January futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) by this time increased by 8 cents to $74.94 per barrel. At the end of the previous session, they fell by 68 cents (0.9%) to $74.86 per barrel.
Market participants remain focused on the meeting of OPEC+ ministers to be held on November 30, which was postponed from November 26, according to media reports, due to disagreements within the group.
The OPEC+ meeting will be the most important event this week “not only because any decision will have direct implications for prices and inflation, but also because the meeting has already been postponed for four days,” said Craig Earlam, senior analyst at OANDA.
Phil Flynn, senior analyst at Price Futures Group, warned that Angola and Nigeria’s desire to produce more oil, which was reported in the press, could irritate Saudi Arabia, and the country would refuse to voluntarily cut production, “flooding the global oil market.”
Market participants see a 68% probability that OPEC will not change its production target at the next meeting, and a 25% chance that it will be increased, according to the CME Group’s OPEC Watch Tool.
Oil prices continue to fall on Monday as traders await the meeting of OPEC+ ministers, which was postponed from November 26 to November 30.
The cost of January futures for Brent on the London ICE Futures exchange as of 7:20 a.m. amounted to $79.85 per barrel, which is $0.73 (0.91%) lower than at the close of the previous session. On Friday, the price of these contracts fell by $0.84 (1%) to $80.58 per barrel.
January futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) fell by $0.73 (0.97%) to $74.81 per barrel by this time. As a result of the previous trading, the value of these contracts fell by $1.56 (2%) to $75.54 per barrel.
Last week, Brent fell by less than 0.1%, WTI – by 0.7%, and both contracts ended in the red for the fifth week in a row.
According to media reports, the postponement of the OPEC+ ministerial meeting was due to disagreements within the group, in particular, the desire of Angola and Nigeria to increase production, while Saudi Arabia continues to voluntarily limit production.
These reports have eased traders’ fears of an even more significant reduction in OPEC+ production, Market Watch notes.
“Saudi Arabia is probably still ready to take on the lion’s share of the supply cuts needed to stabilize the oil market,” said Barbara Lambrecht, commodities analyst at Commerzbank. – “It therefore seems more or less obvious that the kingdom will continue to limit production in the first quarter, as the recent price decline has shown that it will suffer losses otherwise. The question is whether OPEC+ will be able to agree on additional cuts.”
