On November 24, crude oil prices rose slightly. Market players are tense before the upcoming OPEC meeting. There’s an anticipation that the cartel will prolong supply cuts. This move aims to bolster crude prices in the market. Investors are closely watching these developments. Expectations are high for a positive outcome from the meeting. This potential extension indicates efforts to stabilize oil prices. It’s a crucial moment for the market’s future trajectory.
On Friday, the initial set of freed hostages from Gaza came back to Israel. This marked the start of a planned four-day truce, allowing more swaps of hostages for Palestinian detainees. “The fact that they followed through was significant for reducing the risk premium,” noted John Kilduff, a partner at Again Capital LLC in New York. This development highlights progress and paves the way for further exchanges, fostering hope for easing tensions.
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OPEC desicion on oil
Contracts gained their first weekly rise in five weeks as OPEC+ gears up for a pivotal meeting. This gathering prioritizes output cuts due to recent oil price drops driven by demand worries and escalating supply, notably from non-OPEC sources. Unexpectedly, OPEC+ postponed its meeting to Nov. 30 after discord over output levels. Encouragingly, OPEC+ edges closer to a consensus with African oil producers regarding 2024 output. This progress hints at potential agreements within the group.
IG analyst Tony Sycamore predicts an extension of existing cuts as the likely outcome. The delay initially caused a drop in Brent and WTI futures, with a 4% and 5% decline, respectively, on Wednesday. Trading remained calm during Thursday’s U.S. holiday. Craig Erlam from OANDA mentions the potential impact of leaks or comments over the weekend on oil prices next week. However, the Thursday meeting might offer traders some relief.
China’s near-term economic forecast brings hope, boosted by recent data and aid to the property sector. Analysts like Tina Teng from CMC Markets see this as a positive turn for the oil market. However, gains might be limited due to higher U.S. crude stockpiles and poor refining margins. ANZ analysts noted bearish trends, citing rising U.S. oil inventories. Despite this, China’s long-term outlook remains lukewarm, with concerns about weakened oil demand growth amid property sector challenges.
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The market felt uneasy due to the delay, hinting OPEC might not increase cuts amidst worries about oversupply in 2024. Yes Securities’ report forecasts a rise in oil supply for 2023 and 2024, potentially hitting 103.4mb/d. Saudi Arabia and Russia pledged cuts, but concerns about China’s demand, a major consumer, cast uncertainty. Despite commitments from key OPEC players, apprehensions persist regarding global demand, particularly from China.
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