OfBusiness Petroleum Dailies | 29th November 2023

Price

• Brent crude futures gained 33 cents, or 0.4%, at $82.01 a barrel at 0127 GMT.
• U.S. West Texas Intermediate (WTI) crude futures climbed 45 cents, or 0.6%, to $76.86 a barrel.
• MCX Crude oil prices opened at 6388 with a fall of 0.39%.
• Oil prices rose on Wednesday as a storm in the Black Sea region disrupted oil exports from Kazakhstan and Russia, raising fears of supply tightness, while investors awaited a crucial decision by OPEC+, which may deepen or extend output cuts.

Demand and Supply

• A severe storm in the Black Sea region has disrupted up to 2 million barrels per day (bpd) of oil exports from Kazakhstan and Russia, according to state officials and port agent data.
• Kazakhstan’s largest oilfields are cutting combined daily oil output by 56% from Nov. 27, the Kazakh energy ministry said.
• OPEC+ is due to hold an online ministerial meeting on Thursday to discuss 2024 production targets, after delaying the meeting from Nov. 26.
• The talks will be difficult and a rollover of the previous agreement is possible rather than deeper production cuts, four OPEC+ sources said.
• Oil also found support from the dollar’s weakness and a drop in U.S. crude inventories.
• The dollar languished near a three-month trough against its major peers on Wednesday as expectations mount the Federal Reserve could begin lowering rates by early next year.
• A weaker dollar typically supports oil prices as it makes oil cheaper for those holding other currencies.
• Meanwhile, U.S. crude oil inventories fell by 817,000 barrels last week, according to market sources citing American Petroleum Institute figures.

News

• Oil held its biggest gain in a week as traders counted down to a high-stakes OPEC+ meeting on supply, and weighed signs that the Federal Reserve is done raising interest rates.
• Global benchmark Brent traded below $82 a barrel after rallying by more than 2% on Tuesday, with West Texas Intermediate under $77.
• The producer group is due to meet online on Thursday to set policy for 2024 but has yet to resolve a dispute over output quotas for some African members, according to delegates.
• Crude’s gain has been supported by a declining dollar, with a Bloomberg gauge of the US currency sinking to the lowest level since August.
• Comments from Federal Reserve policymakers including Governor Christopher Waller suggested the central bank is set to halt its run of rate increases. A weaker greenback makes commodities more attractive for overseas buyers.
• “The US dollar was dragged lower on a build-up in dovish expectations, which was very much cheered on by oil prices,” said Yeap Jun Rong, market strategist for IG Asia Pte in Singapore. Meanwhile, “all eyes will be on whether the bloc will be able to do more to support prices.”
• Oil remains on track for a back-to-back monthly decline on increased supply from countries outside the Organization of Petroleum Exporting Countries, boosting pressure on the cartel and its allies to impose deeper output cuts.
• The International Energy Agency said earlier this month that the global crude market was on course to flip back into a surplus next year.
• In the US, meanwhile, the industry-funded American Petroleum Institute reported that nationwide inventories fell 817,000 barrels last week, according to people familiar with the figures.
• Stockpiles at Cushing also declined. If confirmed by government data later Wednesday, it would be the first drop in six weeks for levels both nationally and at the key oil storage hub.

OFB’s Opinion

• It is expected that the focus will remain on OPEC+ policy decisions and demand projections as the year concludes. WTI is anticipated to stabilize around $76, with a $5 range above and below unless OPEC+ significantly increases production cuts.
• The oil market’s 2024 outlook hinges on OPEC+ decisions and a failure to reach a preliminary deal may lead to a delayed meeting, potentially exerting downward pressure on oil prices.