Oil falls for fourth session as OPEC+ postpones decision on supply policy

November 27, 2023 (MLN): Oil prices fell for the fourth straight session as OPEC+ delayed a ministerial meeting due to production disagreements with members, leading to uncertainty about output cuts.

Brent crude is currently trading at $80.03 per barrel, down by 0.68% on the day.

While West Texas Intermediate crude (WTI) is trading at $74.96 per barrel, down by 0.77% on the day.

Crude fell alongside equities as the week’s trading kicked off, with data showing profits at China’s industrial companies rose at a much slower pace in October, highlighting risks to growth in the world’s largest crude importer, as Bloomberg reported.

The Organization of Petroleum Exporting Countries had to push back the critical gathering to decide on supply policy by four days to November 30 amid a dispute over quotas.

The latest weakness in crude futures prices came despite a Bloomberg survey of traders and analysts that showed around half expect the group to take additional measures to tighten the market.

Brent has dropped by almost a fifth from a high in late September on increased supply from non-OPEC+ countries and the fading of the Israel-Hamas war risk premium.

The International Energy Agency forecast earlier this month that the market would tip back into surplus next year.

“Saudi Arabia and other OPEC+ members will be keen to avoid any disunity,” said Vivek Dhar, an analyst at Commonwealth Bank of Australia. “OPEC+ will have to show significant supply discipline, or at least jawbone such ability, to alleviate market worries of a deep surplus in oil markets next year.”

Market metrics point to a weakening of conditions, Bloomberg added.

WTI’s prompt spread — the difference between its two nearest contracts — is 25 cents a barrel in contango, a bearish pattern in which spot prices trade at a discount to futures. A month ago, the gap was 84 cents a barrel in backwardation, the opposite structure.

In the Middle East, meanwhile, a chemical tanker with ties to an Israeli-affiliated company was boarded in the waters between Yemen and Somalia on Sunday, the latest in a string of attacks on ships with ties to Israel since Iranian-backed Houthi rebels based in Yemen threatened to target them.

The move highlights the vulnerability of shipping in the key transit point.

Elsewhere, the United Arab Emirates will host COP28 from Thursday. The summit’s president is also the head of the OPEC producer’s state oil company, making it one of the most controversial climate summits in recent memory.