Oil falls more than 1% as concerns about the postponed OPEC+ meeting grow
Oil prices went down by more than one percent on Thursday, prolonging losses from the previous session, after the Organisation of the Petroleum Exporting Countries (OPEC) deferred a ministerial meeting, leading to speculations that producers might cut output less than earlier anticipated.
In a surprise move, OPEC+ and allies including Russia, delayed the ministerial meeting where they were expected to discuss oil output cuts to Nov. 30.
Producers were struggling to agree on output levels and hence possible reductions ahead of the meeting originally set for Nov. 26, OPEC+, sources said.
Three OPEC+ sources, however, said this was linked to African countries, which are smaller producers in the group, which somewhat eased investor concerns.
Analysts stated that Angola, Congo and Nigeria were seeking to raise their 2024 supply quotas above the temporary levels agreed at the OPEC+ June meeting.
“At that meeting, OPEC squared the books on increasing UAE’s quota… by reducing the targets for the African nations that were underperforming their required production numbers,” said Helima Croft, an analyst at RBC Capital Markets, in a client note.
Nigeria has been able to increase output above target because of the improving security situation in the oil-rich Niger Delta, while Angola and the Congo have been producing below their 2024 production targets.
“We think Nigeria can be assuaged as the leadership values its longstanding OPEC membership and improving ties with Saudi Arabia… However, it may be more difficult to bridge the gap with Angola which has been a moodier member of the producer group since it joined in 2007,” said RBC’s Croft.
“Disagreement between members will likely increase volatility within the market over the course of the next week,” analysts at ING Bank said in a note.
In the United States trade was expected to remain muted due to the Thanksgiving holiday.
Brent futures were down 1.2 percent or $1.02, at $80.94 a barrel by 0625 GMT, after falling as much as four percent on Wednesday.
U.S. West Texas Intermediate crude dipped 87 cents, or 1.1 percent, to $76.23, after declining as much as five percent in the previous session.
The inquiries over OPEC+ supply come when data showed U.S. crude stocks jumped by 8.7 million barrels last week, which was much more than the 1.16 million build that analysts had originally expected.
U.S. oil rigs remained stable at 500 in the week to Nov. 22, energy services firm Baker Hughes (BKR.O) said in its closely followed report on Wednesday.
Meanwhile, about 3 percent of crude oil production in the Gulf of Mexico, or around 61,165 barrels of daily output, was shut in by an underwater pipeline leak, the U.S. Coast Guard said on Wednesday.
