OPEC Chess Game: Brent crude futures experienced a marginal decline on Friday, extending losses from the previous session, as traders pondered the potential outcome of OPEC+ negotiations on further production cuts. The futures edged down by 6 cents, or 0.07%, settling at $81.36, following a 0.7% dip in the prior session.
U.S. West Texas Intermediate crude also saw a decrease of 66 cents, or 0.86%, reaching $76.44. No settlement was recorded for WTI on Thursday due to the U.S. public holiday. Both contracts are poised for their first weekly increase in five weeks, with expectations that OPEC+, led by Saudi Arabia, might reduce supply to bring balance to the markets in 2024.
OPEC+ surprised the market by announcing a four-day postponement of a ministerial meeting to Nov. 30, as producers struggled to reach a consensus on production levels. Analysts, including Tony Sycamore from IG, suggest that the most likely outcome is an extension of existing cuts.
The delay initially led to a decline in Brent and WTI futures in Wednesday’s intraday trading. Trading remained subdued due to the U.S. Thanksgiving holiday.
Also Read: Oil Markets in Flux: OPEC+ Meeting Delay Sparks Speculation Amidst Complex Dynamics
The near-term Chinese outlook provided some support, with expectations of additional stimulus directed toward the struggling property sector. However, potential gains may be limited by higher U.S. crude stockpiles and weak refining margins, leading to reduced crude demand from U.S. refineries.
Analysts from ANZ noted that fundamental developments have been bearish, citing rising U.S. oil inventories. China’s longer-term outlook remains tepid, as oil demand growth is anticipated to weaken in the first half of 2024, influenced by the property sector’s challenges.
Non-OPEC production growth is expected to stay robust, with Brazil’s Petrobras planning a $102 billion investment over the next five years to boost output to 3.2 million barrels of oil equivalent per day by 2028. This is an increase from 2.8 million boepd in 2024.