Oil Prices Inch Up as OPEC+ Meeting Anticipates Output Cut

Oil prices witnessed a marginal surge on Tuesday as anticipation looms over the postponed OPEC+ meeting this week. Market players are hopeful for an extension or even intensification of the ongoing production cuts.

At 08:55 ET (13.55 GMT), U.S. crude futures indicated a 0.5% uptick, reaching $75.24 a barrel, while the Brent contract climbed 0.5% to $80.23 a barrel.

Key Highlights:

1. Oil prices edge higher before OPEC+ meeting.
2. OPEC+ to discuss future output levels.
3. Kazakhstan’s oilfields reduce daily output.
4. Attention on upcoming US stockpile reports.
5. Anticipation for key economic indicators: Chinese PMIs, US PMIs, and revised GDP report.

OPEC+ Discusses Oil prices Output Reduction

The Organization of the Petroleum Exporting Countries (OPEC) and its allied nations, including Russia (collectively known as OPEC+), are scheduled for a remote meeting on Thursday. The primary agenda revolves around deliberating output levels anticipated for 2024.

Initially slated for Sunday, the meeting’s postponement triggered a significant market downturn last week. Allegedly, several African nations voiced grievances about their designated 2024 production targets.

However, recent reports hint at a probable compromise within the group. The current decline in prices seems to have spurred discussions. Traders express confidence that Saudi Arabia and Russia, the top two producers, will consent to sustained supply limitations in the upcoming year.

Analysts at ING remarked, “The extension of additional voluntary cuts from Saudi Arabia should erase most of the surplus expected in 1Q24. However, if OPEC+ wants to provide more solid support to the market and ensure that we do not see stocks building early next year, they will need to agree on deeper and broader cuts.”

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Anticipated Decline in US Stockpiles

The past month witnessed a considerable drop in oil prices, attributed to concerns about oversupply in the market, predominantly fueled by robust production from non-OPEC countries, notably the United States.

Tuesday brought some relief to the market as Kazakhstan’s major oilfields reported a 56% reduction in their combined daily oil output.

Focus now shifts to the imminent release of the weekly U.S. supply reports, commencing later in the session with figures from the American Petroleum Institute (API). While a minor decrease in crude inventories is projected, it follows a significantly larger-than-expected surge last week, marking the fourth consecutive week of builds.

Oil prices Market Awaits Chinese PMIs

In addition to the ongoing developments, oil markets are eagerly anticipating several key economic indicators. Among these, the upcoming Purchasing Managers’ Index (PMI) from China stands out as pivotal for insights into business activities in the world’s largest oil importer.

The forthcoming U.S. PMIs for November are also on the horizon, anticipated to reveal a further decline in business activity. Additionally, a revised report on the third-quarter GDP is set for release.

The anticipation surrounding the OPEC+ meeting outcome and the subsequent market response remains at the forefront of the oil industry’s attention as stakeholders navigate the volatile landscape.