Oil Prices Hover as OPEC+ Meeting Looms
Source: business-standard.com
Traders Brace for Key OPEC+ Decisions
Oil prices remained stable on Tuesday, fluctuating slightly as market participants awaited the results of the upcoming OPEC+ meeting scheduled for December 5. Brent crude futures edged up by 14 cents, or 0.19%, to $71.97 a barrel, recovering from a modest dip in the previous session. Similarly, U.S. West Texas Intermediate crude gained 8 cents, or 0.12%, reaching $68.18 after a 10-cent increase on Monday.
According to analysts at ANZ, traders are exercising caution in anticipation of the meeting, which is expected to provide clarity on the oil production strategy for the months ahead. Sources within OPEC+ suggested the group would likely extend its current production cuts until the end of the first quarter in 2024.
The producer alliance, comprising the Organization of the Petroleum Exporting Countries and key allies like Russia, is considering a gradual rollback of production cuts by early 2025. However, growing concerns over surplus supply have placed downward pressure on prices. With OPEC+ responsible for nearly half of the world’s oil output, any decision at the meeting could have significant implications for the global market.
Market Analysts Expect Limited Movement
Experts believe OPEC+ may have little choice but to postpone lifting production cuts due to ongoing pressure from member nations. Priyanka Sachdeva, a senior market analyst at Phillip Nova, commented that any deferral would likely be brief, lasting a month or so. She added that weak demand and a lack of positive market drivers could keep oil prices trading in a narrow range with a potential downward bias.
China’s oil demand, which has historically been a major driver of global consumption, is predicted to peak as early as next year, according to researchers. This shift is expected to widen the gap between supply and demand, further challenging market recovery.
Adding to the bearish outlook, Saudi Arabia, the world’s leading oil exporter, is expected to lower crude prices for Asian buyers to levels not seen in at least four years. This move reflects sluggish demand in the region, which has compounded concerns over excess supply.
External Factors Add to Price Volatility
In addition to supply-demand imbalances, external economic factors are influencing oil prices. Fears that the U.S. Federal Reserve may hold off on cutting interest rates in December have limited price recovery, offsetting some optimism stemming from China. Notably, China’s purchasing managers’ index rose to a seven-month high in November, signaling potential economic improvement.
Despite these positive signals, oil prices have struggled to gain momentum. Last week, prices on both sides of the Atlantic dropped by more than 3%, underlining the market’s vulnerability to weak consumption and economic uncertainties.
With OPEC+ expected to play a pivotal role in shaping the market’s trajectory, all eyes are on the upcoming meeting for clues on the group’s strategy to balance production and support prices in the face of mounting challenges.
