Oil Prices lifted despite weak global demand

December 03, 2024 (MLN): Global oil prices surge on Tuesday, as traders looked ahead to the results of the OPEC+ meeting scheduled for later this week.

Brent crude traded near $72.60 a barrel, increased 1.07% ($0.77) on the day.

While West Texas Intermediate crude (WTI) was at $68.81 per barrel, up by 1.04% ($0.71).

"Given a rise in compliance with production cuts from Russia, Kazakhstan, and Iraq, the lower Brent price level, and indications in press reports, we assume an extension of OPEC+ production cuts till April," Goldman Sachs analysts said in a note.

OPEC+, which accounts for about half of the world's oil production, has been looking to gradually unwind production cuts through 2025, as Reuters reported. 

However, the prospect of an oil market surplus has exerted downward pressure on prices, with Brent trading nearly 6% below its average for December 2023.

"I think there's no other option but to defer it," Priyanka Sachdeva, a senior market analyst at Phillip Nova said, adding that mounting pressure from participant-nations to increase production could cap any extension at a couple of months.

The global oil demand outlook remains weak, with China's crude imports likely to peak as early as next year, as demand for transport fuel begins to decrease, researchers and analysts said.

Saudi Arabia, the world's top exporter, is expected to cut crude prices for Asian buyers to the lowest levels in at least four years, according to traders.

Concerns that the U.S. Federal Reserve may not cut rates at its December meeting have also capped oil prices.

Copyright Mettis Link News