Oil prices extend losses after Opec+ meeting delay

The build up in crude inventories is also adding pressure to prices

Brent slumped as much as 4 per cent while WTI fell more than 5 per cent after Opec announced a delay in its key meeting. Reuters
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Oil prices extended losses on Thursday after the Opec+ group of crude producers postponed its scheduled meeting and a rise in US stockpiles stoked demand fears.

Brent, the global benchmark for two thirds of the world's oil, was trading 0.78 per cent lower at $81.32 a barrel at 4.45pm UAE time on Thursday. West Texas Intermediate, the gauge that tracks US crude, was also down 0.78 per cent at $76.50 a barrel.

Brent slumped as much as 4 per cent on Wednesday, while WTI fell more than 5 per cent after the Opec+ group announced a delay in its key meeting, a move that surprised the market.

The producers' group postponed its Joint Ministerial Monitoring Committee meeting as well as the Opec and non-Opec Ministerial Meeting, originally planned for November 25 and 26, to November 30.

It did not give a reason for the delay in a brief statement posted on its website.

The meeting of the Opec+ group, led by Saudi Arabia – the world's biggest oil exporter – and Russia, was expected to chart the course of crude output cuts in 2024 and discuss any possible changes to their long-standing agreement aimed at stabilising the oil market.

"Crude futures were back under strong selling pressure early Thursday in Asia as traders in the region reacted to the news that the Opec+ ministerial meeting had been postponed from November 26 to November 30," energy consultancy Vanda Insights said.

"The delay is being seen as an indication that the group may be struggling to agree on a production cut and/or the proposed reduction in the baselines of Opec members Nigeria and Angola."

The 2024 production quotas decided in June included a lower target for nine of the 23 member countries: Russia, Nigeria, Angola, Malaysia, Azerbaijan, Equatorial Guinea, Congo, Brunei and Sudan.

"Every member country acknowledges the need to reduce output to support prices into 2024. The question is how to share the burden of this," said Jorge Leon, senior vice president at Rystad Energy.

"Despite the challenges, we still expect Opec+ to reach an agreement to reduce production in the upcoming ministerial meeting. This could involve further voluntary cuts from members.

"However, we cannot completely rule out the possibility of a deadlock at this point."

The Norway-based consultancy expects oil prices to remain close to $80 a barrel next year without further production cuts from the group.

Oil prices, which rose at the start of the Israel-Gaza war, have since given up all gains as fears of the conflict escalating beyond the Gaza border ease and demand concerns rise.

Oil has slumped for four straight weeks, scaling down from the near $98 per barrel level achieved in late September.

Opec+ in its last ministerial meeting decided to stick to its output policy.

The group has total production cuts in place of 3.66 million barrels per day, which includes a two million bpd reduction agreed on last year as well as voluntary cuts of 1.66 million bpd announced in April.

On November 5, Saudi Arabia and Russia said they would maintain their combined output cuts of 1.3 million bpd until the end of this year.

Earlier this month, Opec raised its forecast for oil demand growth for this year and said it expected record demand from China and India in the fourth quarter.

World oil demand will rise by 2.5 million bpd this year, up from the group’s previous forecast of 2.44 million bpd, the group said in its latest monthly oil market report.

A build up of US crude stocks also added pressure on oil prices.

In the US, inventories jumped by 8.7 million barrels last week to the highest level since July, according to the US Energy Information Administration data.

Analysts polled by Reuters were expecting an increase of 1.16 million barrels.

Meanwhile, US oil rigs remained unchanged at 500 in the week to November 22, Reuters reported, citing Baker Hughes' closely followed report released on Wednesday.

Updated: November 23, 2023, 2:46 PM