On Friday, Brent crude futures experienced a slight decline, continuing the losses observed in the previous session. This dip came as traders pondered the possibility of OPEC+ reaching an agreement on additional production cuts.
Brent crude futures dipped by 6 cents, or 0.07%, reaching $81.36 at 0400 GMT, following a 0.7% decrease in the preceding session. Simultaneously, U.S. West Texas Intermediate crude slipped by 66 cents, or 0.86%, closing at $76.44, down from its Wednesday closing price. Notably, there was no settlement for WTI on Thursday due to a U.S. public holiday.
Both futures contracts are poised to record their first weekly increase in five weeks, bolstered by expectations that OPEC+, led by Saudi Arabia, may implement supply cuts to stabilize the markets into 2024.
OPEC+ surprised the market by announcing a postponement of a ministerial meeting to Nov. 30, extending the timeline by four days as producers grappled to reach a consensus on production levels.
Tony Sycamore, a market analyst at IG in Sydney, expressed in a note that the most probable outcome now seems to be an extension of existing cuts.
The unexpected delay initially caused a decline of up to 4% in Brent futures and 5% in WTI during Wednesday’s intraday trading. Trading remained subdued due to the Thanksgiving holiday in the U.S.
Market sentiment received support from a stronger near-term Chinese outlook. Tina Teng, a market analyst, noted that recent Chinese data and additional support to the indebted property sector could positively impact the oil market’s short-term trend. Chinese stocks rose on Thursday amid expectations of increased stimulus for the struggling property sector.
However, potential gains might be constrained by higher U.S. crude stockpiles and weak refining margins, leading to reduced crude demand from U.S. refineries, according to analysts. ANZ analysts highlighted in a note that fundamental developments have been bearish, with rising U.S. oil inventories.
Looking ahead, China’s longer-term outlook appears lukewarm. Analysts suggest that oil demand growth could weaken to around 4% in the first half of 2024, following robust post-COVID growth levels in 2023, as challenges in the country’s property sector impact diesel usage.
Meanwhile, non-OPEC production growth is expected to remain robust, with Brazilian state energy firm Petrobras planning a $102 billion investment over the next five years to increase output to 3.2 million barrels of oil equivalent per day (boepd) by 2028, up from 2.8 million boepd in 2024.