Oil prices surged on Tuesday (28/11), closing up around 2%. Supported by the possibility that OPEC+ will extend or deepen supply cuts, a decline in Kazakhstan’s oil production due to the storm and the weakening of the United States (US) dollar.
According to Reuters , the price of Brent crude oil closed up US$1.70 or 2.1% at US$81.68 per barrel. Meanwhile, the price of West Texas Intermediate (WTI) crude oil rose US$1.55 or 2.1% to US$76.41.
OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia will hold an online ministerial meeting on Thursday (30/11) to discuss 2024 production targets.
“The talks will be difficult and it will likely result in a cancellation of the previous agreement rather than deeper production cuts,” four OPEC+ sources said.
Markets fell last week when OPEC+ pushed back the original date of its meeting to address differences in output targets for African producers.
“We believe the market’s primary focus will be the continuation of Saudi Arabia’s additional voluntary cuts of 1 million barrels per day,” said Walt Chancellor, energy analyst at Macquarie in a note.
“We believe an extension of these cuts into Q2/Q3 2024 could represent a threshold for this meeting to be viewed as bullish.”
Commerzbank’s Carsten Fritsch said one possible compromise could involve Angola and Nigeria accepting reduced output targets for several months if targets for other countries are also lowered.
“According to delegates, Saudi Arabia is demanding lower production quotas than other OPEC+ countries. Although Kuwait has signaled that it is willing to do so, some countries appear to be opposing the move.”
The United Arab Emirates would likely oppose this given that its 2024 production target was raised at its insistence when OPEC+ held its previous meeting in early June, he added.
Oil also got support from a weaker dollar, a forecast drop in US crude oil inventories and a fall in Kazakhstan’s output.
Elsewhere, Kazakhstan’s largest oil fields have cut their combined daily oil output by 56%.
US crude oil inventories fell by 817,000 barrels last week, according to market sources citing figures from the American Petroleum Institute.
The US government’s weekly data on stocks will be released this Wednesday (29/11).
Meanwhile, the US dollar slumped to a three-month low on Tuesday after US Federal Reserve Governor Christopher Waller signaled the possibility of a Fed policy rate cut in the next few months if inflation declines further.
A weaker dollar typically increases oil demand, making dollar-denominated oil cheaper for buyers using other currencies.
In the Middle East, Israeli forces and Hamas fighters held their fire well past the deadline for a pre-established ceasefire, which was extended at the last minute for two days to free more hostages.
Source : Investasi Kontan