Crude oil prices dipped at the start of trading today following the latest weekly report from the U.S. Energy Information Administration, which revealed a significant increase in gasoline stocks.
As of this writing, Brent crude was priced at $72.61 per barrel, while West Texas Intermediate (WTI) was at $68.53 per barrel—both lower than their opening values.
Traders are also closely watching the upcoming OPEC+ meeting on Sunday, where the group is expected to extend its production cuts. This decision is likely already priced into the market, meaning little change is expected after the meeting. The key point of uncertainty is whether the extension will be for one month, three months, or potentially longer. A longer extension could provide more clarity to the oil market. However, if the cuts are not extended, oil prices could dip further, said Suvro Sarkar, an analyst at DBS Bank in Singapore, speaking to Reuters.
Vandana Hari, founder of Vanda Insights, told Bloomberg that crude prices may have already accounted for a small delay in OPEC+’s planned production tapering. A decision to delay cuts until January 1 or even an indefinite delay would surprise traders, she said.
Concerns over oil demand are also weighing on the market, according to ING’s commodity analysts, Warren Patterson and Ewa Manthey. In a recent update, they noted that crude oil prices are struggling to break past the $75 per barrel mark due to demand concerns. They cautioned that any premature increase in production from OPEC+ could lead to a market oversupply.
Earlier this year, OPEC+ had announced plans to gradually restore supply later in 2024, depending on market conditions. However, with prices remaining weak for months, the group has delayed this plan. Some experts suggest that the production caps may need to remain in place for a longer period, as the market has yet to respond with higher prices.
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