Oil Dips 1% to $81.11 per Barrel Amid Growing Concerns Over Delayed OPEC+ Meeting

200

Oil prices experienced a roughly 1% decline on Thursday, extending losses from the previous session, as OPEC+ decided to postpone a crucial meeting. This development has sparked speculation that the group might not deepen output cuts in the coming year due to disagreements among African members.

As of 0916 GMT, Brent futures were down by 1%, or 85 cents, reaching $81.11 per barrel. This follows a significant drop of up to 4% on Wednesday. Similarly, U.S. West Texas Intermediate crude slid by approximately 1%, or 71 cents, settling at $76.39, after a decline of as much as 5% in the preceding session.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, surprised the market by deferring a ministerial meeting to November 30, where discussions on oil output cuts were anticipated. The delay stems from challenges among producers, particularly a trio of African nations – Angola, Congo, and Nigeria – struggling to reach a consensus on output levels and potential reductions.

Sources within OPEC+ reveal that Angola, Congo, and Nigeria are seeking to increase their 2024 supply quotas beyond the provisional levels agreed upon in June. While Angola and Congo have fallen below their 2024 production targets, Nigeria has managed to exceed its target, thanks to improved security conditions in the Niger Delta.

Analysts point out that Nigeria is likely to cooperate, given its commitment to OPEC membership and improved relations with Saudi Arabia. However, bridging the gap with Angola, a historically moody member since joining in 2007, could prove more challenging.

This unexpected episode underscores the significant challenges facing OPEC+ in achieving consensus, warned Tamas Varga of oil broker PVM. The uncertainty in OPEC+ supply discussions coincides with data revealing a substantial 8.7 million-barrel increase in U.S. crude stocks last week, far exceeding the 1.16 million builds anticipated by analysts.

Simultaneously, approximately 3% of crude oil production in the Gulf of Mexico faced disruption due to an underwater pipeline leak, as reported by the U.S. Coast Guard on Wednesday.

On the demand side, concerns persist. Although a survey indicates a moderation in the downturn of eurozone business activity in November, data suggests the bloc’s economy may contract again this quarter as consumers remain cautious about spending.

U.S. trading activity is expected to be subdued on Thursday due to the Thanksgiving public holiday. As these developments unfold, continuous volatility in oil prices is anticipated, with potential price swings exceeding $10 after next Thursday’s meeting and possibly even before.