Oil prices continued to decline on Thursday due to persistent demand fears after an unexpected build in US crude oil stockpiles and supply uncertainties as a result of a four-day delay in the OPEC+ meeting, at which member countries will decide their production policy for next year.
International benchmark crude Brent traded at $81.34 per barrel at 10.45 a.m. local time (0745 GMT), a 0.75% fall from the closing price of $81.96 a barrel in the previous trading session on Wednesday.
The American benchmark, West Texas Intermediate (WTI), traded at the same time at $76.63 per barrel, down 0.60% from Wednesday’s close of $77.10 per barrel.
Brent crude oil slipped more than 4% on Wednesday following concerns of estimated demand weakness in the US, the world’s largest oil consumer, while supply fears were eased following an announcement of a humanitarian pause in the Gaza Strip.
Prices started Thursday on a negative note as US crude oil inventories increased by around 8.7 million barrels, compared to the American Petroleum Institute’s expectation of a rise of around 9 million barrels.
Uncertainties surrounding a delay to the OPEC+ meeting, where the group is expected to agree on whether or not to extend the organization’s current output curbs, are also accelerating market volatility.
The group announced late on Wednesday that the meeting slated for Sunday will be postponed to Thursday, Nov. 30.
‘This postponement indicates difficulties within the OPEC+ group to reach an agreement to cut production,’ said Rystad Energy’s Senior Vice President Jorge Leon in an e-mailed note.
Leon said the main problem is how to share the burden as the group is discussing “the need to reduce output to support prices into 2024.”
‘Our analysis shows that without further cuts, oil prices will remain close to $80 per barrel next year,’ he added.
Leon argued that the four-day postponement shows ‘reaching a new agreement to cut production will prove to be challenging.’
In accordance with fresh production quotas agreed in June, some OPEC+ member countries, including Russia, Nigeria, Angola, Malaysia, Azerbaijan, Equatorial Guinea, the Congo, Brunei and Sudan, would lower their production targets for next year.
‘We cannot completely rule out the possibility of a deadlock at this point,’ he warned.
-Will Middle East tension ease?
Oil markets are closely watching the conflict between Israel and Palestine and its possible impact on oil trading routes.
Although both sides agreed on a four-day humanitarian pause and prisoner swap to take effect at 10 a.m. local time (0700 GMT) on Thursday, Israel intensified its attacks across the Gaza Strip late Wednesday.
