NEW YORK: Oil prices jumped on Tuesday (Nov 28), settling up about 2% on the possibility Opec+ will extend or deepen supply cuts, a storm-related drop in Kazakh oil output and a weaker US dollar.
Brent crude futures settled up US$1.70, or 2.1%, at US$81.68 (RM381.56) a barrel. US West Texas Intermediate crude gained US$1.55, or 2.1%, to settle at US$76.41 (RM356.94).
Opec+, the Organization of the Petroleum Exporting Countries (Opec) and allies including Russia, is due to hold an online ministerial meeting on Thursday to discuss 2024 production targets.
The talks will be difficult and a rollover of the previous agreement is possible rather than deeper production cuts, four Opec+ sources said.
The market tumbled last week when Opec+ pushed back the original date for its meeting to iron out differences on production targets for African producers.
“We believe the market’s primary focus surrounds the continuation of Saudi Arabia’s additional voluntary cuts of one million barrels per day,” Walt Chancellor, an energy strategist at Macquarie, said in a note. “We believe an extension of these cuts into Q2/Q3 2024 may represent the threshold for this meeting being viewed bullishly.”
One possible compromise could involve Angola and Nigeria accepting reduced production targets for a few months if targets for the other countries were likewise lowered, said Commerzbank's Carsten Fritsch.
“According to delegates, Saudi Arabia is demanding lower production quotas from the other Opec+ countries. While Kuwait has signalled that it would be willing to do so, some countries are apparently resisting any such move.”
The United Arab Emirates is likely to oppose this, given that its 2024 production target was increased at its urging when Opec+ held its previous meeting in early June, he added.
Oil also found support from a weak dollar, an expected decline in Opec crude inventories and the drop in Kazakh output.
Kazakhstan’s largest oilfields have cut their combined daily oil output by 56%.
Four analysts polled by Reuters estimated that the latest round of weekly Opec supply reports will show crude inventories fell by about 900,000 barrels. – Reuters