Oil prices fall ahead of Opec meeting
Both oil contracts rose slightly last week, which was their first weekly gain in five
London — Oil prices slipped on Monday, with Brent falling towards $80 a barrel, as investors waited for an Opec+ meeting later this week for an agreement expected to curb supplies into 2024.
Brent crude futures fell 42c, or 0.5%, to $80.16 a barrel by 9.01 GMT, while US West Texas Intermediate crude futures were at $75.05 a barrel, down 49c, or 0.7%.
Both contracts rose slightly last week, their first weekly gain in five, underpinned by expectations that Saudi Arabia and Russia could roll over voluntary supply cuts into early 2024 and Opec+ might discuss plans to reduce output further.
However, prices had tumbled in the middle of the week after Opec+ and their allies, including Russia, postponed a ministerial meeting to November 30 to iron out differences on production targets for African producers.
Since then, the group has moved closer to a compromise, four Opec+ sources told Reuters on Friday.
ING analysts said market sentiment remains negative given the dispute within Opec+ over production quotas, though they expect Saudi Arabia to roll over its additional voluntary cut of 1-million barrels per day into next year.
“Clearly, if we do not see this, it would put further downward pressure on the market, given the surplus over the first quarter of 2024,” ING analysts said in a note.
Estimated exports by Opec countries have declined to 1.3-million barrels per day below levels in April, Goldman Sachs analysts said in a note, in line with the group’s supply targets.
“We still expect an extension of the unilateral Saudi and Russia cuts through at least the first quarter of 2024, and unchanged group cuts, though a deeper group insurance cut is likely on the table,” the bank added.
However, the United Arab Emirates is set to ramp up exports of flagship Murban crude early in 2024, according to traders and Reuters data.
In the US, higher crude stockpiles could also put downward pressure on prices, analysts have said.
The International Energy Agency said it expects a slight surplus in global oil markets in 2024 even if Opec+ nations extend their cuts into next year.
Commonwealth Bank analyst Vivek Dhar said: “With the IEA forecasting that global oil demand will only grow 900,000 bpd next year, down from 2.4-million bpd growth in 2023, Opec+ will have to show significant supply discipline, or at least jawbone such ability, to alleviate market worries of a deep surplus in oil markets next year.”
Oil prices have also stabilised after geopolitical tensions dialled down in the Middle East after a ceasefire in Gaza and an exchange of hostages and prisoners.
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