Nov 28 2024: Oil prices edged lower on Thursday following an unexpected rise in U.S. gasoline inventories, while markets awaited the weekend OPEC+ meeting for clarity on production policies.
- Brent crude: Down 0.2%, trading at $72.69 per barrel by 04:01 GMT.
- WTI crude: Also fell 0.2%, at $68.58 per barrel.
Market Impact from U.S. Inventory Data
The U.S. Energy Information Administration reported a 3.3-million-barrel increase in gasoline inventories for the week ending November 22, contrary to expectations of a draw ahead of the holiday travel season. This surprise buildup dampened sentiment, compounding concerns over slowing fuel demand growth in the U.S. and China.
Yeap Jun Rong of IG noted that oil’s bearish momentum persists, with Middle East supply risks easing and inventory levels weighing on prices.
Focus on OPEC+ Meeting
The OPEC+ alliance, which accounts for nearly half of global oil production, will meet on Sunday to discuss potential delays to its planned production hikes for 2024.
- Potential Delays: Markets widely expect a postponement, with speculation ranging from a one-month to a three-month deferral.
- Market Expectations: DBS Bank’s Suvro Sarkar suggested that while delays are priced in, uncertainty about their duration could influence price movements.
OPEC+ had previously committed to a gradual rollback of production cuts starting January, but recent signals suggest a cautious approach to avoid exacerbating supply-demand imbalances.
Geopolitical and Seasonal Influences
- Middle East Ceasefire: Israel’s agreement with Lebanon’s Hezbollah has eased immediate concerns about potential supply disruptions, contributing to a 3% weekly decline in Brent and WTI prices. However, ANZ analysts warn that the geopolitical situation remains fluid, leaving the market on edge.
- Thanksgiving Holiday: U.S. markets are likely to see light trading volumes, potentially muting price volatility in the near term.
Analysts Signal Undervalued Prices
Top commodities researchers at Goldman Sachs and Morgan Stanley argue that current prices do not fully reflect market deficits. They also highlight potential risks to Iranian supply if the U.S. imposes sanctions under President-elect Donald Trump’s administration.
Outlook
While OPEC+ deliberations will provide short-term direction, broader concerns over demand growth and geopolitical risks will continue to weigh on market sentiment. A failure to delay production hikes could pressure prices further, while a longer postponement may offer temporary relief to oil markets.
