Brent teeters after OPEC+ delays output policy discussion for 2024

The front-month ICE Brent contract has inched $0.50/bbl higher on the day, to trade at $80.69/bbl at 09.00 GMT.

PHOTO: Flag of OPEC. Getty Images

Upward pressure:

Brent futures remained supported amid expectations that OPEC+ would extend its voluntary production cuts into 2024.

OPEC+ is scheduled to hold a virtual meeting on 30 November to discuss output policy for next year.

The current situation of the crude oil market seems to be “undervalued” as energy demand typically peaks during the fall and spring seasons, analysts said. “Once we get through the shoulder [winter] season we’re going to see significant drawdowns in crude supplies in the coming weeks and months,” said Price Futures Group’s senior market analyst Phil Flynn.

Besides, OPEC’s largest producer Saudi Arabia could “try to shock the market” with an additional 1 million b/d lollipop cut, Flynn added.

“The group [OPEC+] has always found a way to get an agreement over the line before, even if that means the biggest producers taking on more of the additional commitments,” commented OANDA’s senior market analyst Craig Erlam.

Downward pressure:

Meanwhile, Brent futures felt some downward pressure amid speculations of a dispute between Saudi Arabia and other OPEC member nations over the group's production targets for next year. The group’s joint ministerial meeting has allegedly been pushed back to 30 November because of this.

“The OPEC+ meeting will be this week’s most impactful event in oil markets,” Erlam said. The meeting got delayed by four days, “so there’s clearly some disagreement within the alliance,” he added.

Additionally, concerns about surplus supplies in the oil market have put a lid on Brent’s price. There are wide expectations that Angola, Nigeria, and Iran would increase their production levels in 2024.

By Aparupa Mazumder

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