Brent trades in a range as market sentiments signal a calm before a storm

The front-month ICE Brent contract has inched $0.19/bbl higher on the day, to $81.57/bbl at 09.00 GMT.

PHOTO: Silhouette of oil pump jack against stormy clouds. Getty Images

Upward pressure:

Brent futures contract have gained 1% over the past week, as the benchmark holds its ground amid market uncertainty.

Russian Deputy Prime Minister Alexander Novak considers the current oil price level to be an "objective reflection" of the balanced market, according to Russia’s state agency TASS. OPEC+ members will discuss the output policy for next year on 30 November.

Six producers in the Gulf of Mexico have shut down 61,165 b/d of oil production following a leak from an underwater oil pipeline off the Louisiana coast, Reuters reported citing the Coast Guard. This accounts for 3% of US offshore oil production, according to Reuters. The source of the estimated 1.1-million-gallon leak (26,190 bbls) has not yet been identified.

Downward pressure

Reports of a standoff between Saudi Arabia and other OPEC members over production levels and targets have increased anxiety in the market.

Nigeria, Angola, and Congo may be involved in the disagreement since their 2024 production targets were cut earlier this year, according to Warren Patterson, ING's head of commodities strategy. Their targets for 2024 were to be reviewed by the end of this year and possibly raised as these countries wanted to increase their output levels. But the revision of targets has not happened yet, Patterson noted. Currently, Angola and Congo are producing below their previously fixed 2024 production targets. However, Nigeria has overshot its 2024 target with 1.49 million b/d output, he said.

Other OPEC members Iran, Venezuela and the UAE are also planning to ramp up their production levels in the coming months.

Although their individual output increases are likely to be modest, especially when compared to Saudi Arabia's output, their combined production increase can still add a substantial amount of crude oil to the market in the near future.

OPEC member Libya has successfully exported its first shipment of 600,000 bbls of crude oil from the Erawin oil field in the Murzuq basin, according to Libya's National Oil Corporation. Any additional supply in the market amidst concerns of oversupply can put a downward pressure on Brent.

By Konica Bhatt

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