Brent climbs ahead of OPEC+ oil production decision
2023.11.23 22:31
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© Reuters. An aerial view shows a crude oil tanker at an oil terminal off Waidiao island in Zhoushan, Zhejiang province, China January 4, 2023. China Daily via REUTERS/File Photo
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By Colleen Howe
BEIJING (Reuters) – futures rose in early Asian trade on Friday, reversing losses in the previous session as traders speculated on whether OPEC+ would come to an agreement on further production cuts.
Brent crude futures gained 29 cents, or 0.4%, to $81.71 at 0213 GMT, after settling down 0.7% in the previous session.
U.S. West Texas Intermediate crude slid 38 cents, or 0.5%, to $76.72, from its Wednesday close. There was no settlement for WTI on Thursday as it was a U.S. public holiday.
Both contracts are on track to mark their first weekly rise in five, supported by expectations that OPEC+, led by Saudi Arabia, could reduce supply to balance the markets into 2024.
The Organization of Petroleum Exporting Countries and allies, together known as OPEC+, surprised the market with an announcement on Wednesday that it would postpone a ministerial meeting by four days to Nov. 30, after producers struggled to come to a consensus on production levels.
“The most likely outcome now appears to be an extension of existing cuts,” Tony Sycamore, a Sydney-based market analyst at IG, wrote in a note.
The surprise delay had initially brought Brent futures down by as much as 4% and WTI by as much as 5% in Wednesday’s intraday trading.
Trading remained subdued because of the Thanksgiving holiday in the U.S.
On the demand side, poor refining margins have led to weaker crude demand from refineries in the U.S., analysts said.
“Fundamentals developments have been bearish with rising U.S. oil inventories,” ANZ analysts said in a note.
In China, analysts say oil demand growth could weaken to around 4% in the first half of 2024 from strong post-COVID growth levels in 2023, as the country’s property sector crunch weighs on diesel use.
Non-OPEC production growth is set to stay strong with Brazilian state energy firm Petrobras planning to invest $102 billion over the next five years to boost output to 3.2 million barrels of oil equivalent per day (boepd) by 2028 from 2.8 million boepd in 2024.
