Oil loses ground amid increase in US petrol stocks
Traders await outcome of Opec+ meeting, where output policy will be discussed
28 November 2024 - 07:51
bySiyi Liu
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Singapore — Oil prices drifted lower on Thursday after a surprise jump in US petrol inventories, with investors focusing on the Opec+ meeting this weekend to discuss oil output policy.
Brent crude futures fell by 14c, or 0.2%, to $72.69 a barrel by 4.01am GMT, while US West Texas Intermediate (WTI) crude futures were also down 14c, or 0.2%, at $68.58 a barrel.
Trading is expected to be light due to US Thanksgiving holiday kicking off from Thursday.
Oil was likely to hold to its near-term bearish momentum as the risk of supply disruption faded in the Middle East and stemming from the higher-than-expected US petrol inventories, said Yeap Jun Rong, a market strategist at IG.
US petrol stocks rose 3.3-million barrels in the week ended on November 22, the US Energy Information Administration (EIA) said on Wednesday, countering the expectation for a small draw in fuel stocks ahead of record holiday travel.
Slowing fuel demand growth in top consumers the US and China has weighed heavily on oil prices this year, though supply curtailments from Opec+, which groups oil cartel Opec with Russia and other allies, have limited the losses.
Opec+ will meet on Sunday. Two sources from the producer group told Reuters on Tuesday that members had been discussing a further delay to a planned oil output hike that was due to start in January.
A further deferment, as expected by many in the market, had mostly been factored into oil prices already, said Suvro Sarkar, energy sector team lead at DBS Bank.
“The only question is whether it’s a one-month pushback, or three-month, or even longer. That would give the oil market some direction. On the other hand, we would be worried about a dip in oil prices if the deferments don’t come,” he said.
The group, which pumps about half the world’s oil, had previously said it would gradually roll back oil production cuts with small increases over many months in 2024 and 2025.
Brent and WTI have lost more than 3% each so far this week, under pressure from Israel’s agreement to a ceasefire deal with Lebanon’s Hezbollah group. The ceasefire started on Wednesday and helped ease concerns that the conflict could disrupt oil supplies from the top producing Middle East region.
Market participants were uncertain how long the break in the fighting would hold, with the broader geopolitical backdrop for oil remaining murky, analysts at ANZ Bank said.
Oil prices were undervalued due to a market deficit, heads of commodities research at Goldman Sachs and Morgan Stanley warned in recent days, also pointing to a potential risk to Iranian supply from sanctions that might be implemented under US president-elect Donald Trump.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil loses ground amid increase in US petrol stocks
Traders await outcome of Opec+ meeting, where output policy will be discussed
Singapore — Oil prices drifted lower on Thursday after a surprise jump in US petrol inventories, with investors focusing on the Opec+ meeting this weekend to discuss oil output policy.
Brent crude futures fell by 14c, or 0.2%, to $72.69 a barrel by 4.01am GMT, while US West Texas Intermediate (WTI) crude futures were also down 14c, or 0.2%, at $68.58 a barrel.
Trading is expected to be light due to US Thanksgiving holiday kicking off from Thursday.
Oil was likely to hold to its near-term bearish momentum as the risk of supply disruption faded in the Middle East and stemming from the higher-than-expected US petrol inventories, said Yeap Jun Rong, a market strategist at IG.
US petrol stocks rose 3.3-million barrels in the week ended on November 22, the US Energy Information Administration (EIA) said on Wednesday, countering the expectation for a small draw in fuel stocks ahead of record holiday travel.
Slowing fuel demand growth in top consumers the US and China has weighed heavily on oil prices this year, though supply curtailments from Opec+, which groups oil cartel Opec with Russia and other allies, have limited the losses.
Opec+ will meet on Sunday. Two sources from the producer group told Reuters on Tuesday that members had been discussing a further delay to a planned oil output hike that was due to start in January.
A further deferment, as expected by many in the market, had mostly been factored into oil prices already, said Suvro Sarkar, energy sector team lead at DBS Bank.
“The only question is whether it’s a one-month pushback, or three-month, or even longer. That would give the oil market some direction. On the other hand, we would be worried about a dip in oil prices if the deferments don’t come,” he said.
The group, which pumps about half the world’s oil, had previously said it would gradually roll back oil production cuts with small increases over many months in 2024 and 2025.
Brent and WTI have lost more than 3% each so far this week, under pressure from Israel’s agreement to a ceasefire deal with Lebanon’s Hezbollah group. The ceasefire started on Wednesday and helped ease concerns that the conflict could disrupt oil supplies from the top producing Middle East region.
Market participants were uncertain how long the break in the fighting would hold, with the broader geopolitical backdrop for oil remaining murky, analysts at ANZ Bank said.
Oil prices were undervalued due to a market deficit, heads of commodities research at Goldman Sachs and Morgan Stanley warned in recent days, also pointing to a potential risk to Iranian supply from sanctions that might be implemented under US president-elect Donald Trump.
Reuters
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