Oil Prices Drop on OPEC+ Meeting Postponement and Surging US Reserves
Date: 2023-11-23 Author: Dima Zakharov Categories: ECONOMY
Meeting Delay and Saudi Arabia's Concerns
The prices of Brent and WTI futures witnessed a decrease on the ICE Futures and NYMEX exchanges, respectively. Brent futures in London dropped by $0.98 (1.2%) to $80.98 per barrel, while WTI futures in New York fell by $0.83 (1.08%) to $76.27 per barrel. The market activity was subdued due to the Thanksgiving holiday in the United States.
The OPEC+ ministerial meeting, initially scheduled for November 26, was moved to November 30, alongside the OPEC conference. Reports suggest that OPEC+ faced challenges, with Saudi Arabia expressing dissatisfaction with other participating countries regarding production levels.
Potential Impact on Oil Prices
Unnamed delegates hinted that the OPEC+ conference might be postponed indefinitely, raising concerns. Saudi Arabia, already cutting production by an additional 1 million barrels per day since July, engaged in tough negotiations with other members over production levels.
Rystad Energy estimates that without further production cuts, oil prices in 2024 will remain around $80 per barrel. While OPEC ministerial committee meetings have never been postponed by four days, Rystad anticipates an agreement on production reduction at the upcoming session, acknowledging the possibility of a deadlock in negotiations.
Surge in US Oil Reserves
The US Energy Ministry reported an increase of 8.701 million barrels in commercial oil reserves last week. Gasoline inventories rose by 749,000 barrels, while distillate stocks decreased by 1.018 million barrels for the week ending on November 17.
Experts surveyed by Trading Economics expected a 1.16 million barrel increase in oil reserves, a 150,000 barrel reduction in gasoline stocks, and a 761,000 barrel decrease in distillate reserves. Additionally, oil stocks at the Cushing terminal, where NYMEX-traded oil is stored, rose by 858,000 barrels during the week.
The prices of Brent and WTI futures witnessed a decrease on the ICE Futures and NYMEX exchanges, respectively. Brent futures in London dropped by $0.98 (1.2%) to $80.98 per barrel, while WTI futures in New York fell by $0.83 (1.08%) to $76.27 per barrel. The market activity was subdued due to the Thanksgiving holiday in the United States.
The OPEC+ ministerial meeting, initially scheduled for November 26, was moved to November 30, alongside the OPEC conference. Reports suggest that OPEC+ faced challenges, with Saudi Arabia expressing dissatisfaction with other participating countries regarding production levels.
Potential Impact on Oil Prices
Unnamed delegates hinted that the OPEC+ conference might be postponed indefinitely, raising concerns. Saudi Arabia, already cutting production by an additional 1 million barrels per day since July, engaged in tough negotiations with other members over production levels.
Rystad Energy estimates that without further production cuts, oil prices in 2024 will remain around $80 per barrel. While OPEC ministerial committee meetings have never been postponed by four days, Rystad anticipates an agreement on production reduction at the upcoming session, acknowledging the possibility of a deadlock in negotiations.
Surge in US Oil Reserves
The US Energy Ministry reported an increase of 8.701 million barrels in commercial oil reserves last week. Gasoline inventories rose by 749,000 barrels, while distillate stocks decreased by 1.018 million barrels for the week ending on November 17.
Experts surveyed by Trading Economics expected a 1.16 million barrel increase in oil reserves, a 150,000 barrel reduction in gasoline stocks, and a 761,000 barrel decrease in distillate reserves. Additionally, oil stocks at the Cushing terminal, where NYMEX-traded oil is stored, rose by 858,000 barrels during the week.
