Energy
Wednesday, November 22nd, 2023 3:12 pm EDT
Key Points
- Oil Price Decline: U.S. crude prices fell over 4% following the delay of a crucial OPEC meeting on production cuts. The West Texas Intermediate (WTI) contract for January dropped $3.27 to $74.50 a barrel, while the Brent contract for January fell $3.32 to $79.13 a barrel.
- OPEC Meeting Delay: OPEC announced a delay in the meeting of energy ministers until next Thursday, citing challenges related to Saudi dissatisfaction with the production levels of other OPEC members. This delay contributed to uncertainties in the oil market.
- Compliance Challenges for OPEC+: Compliance with production quotas is identified as a significant challenge for OPEC and its allies (OPEC+). Analysts, including Tamas Varga from PVM Oil Associates, anticipate weak compliance going forward, with a particular focus on Russia, which needs to finance its war in Ukraine.
U.S. crude prices experienced a more than 4% decline following the Organization of Petroleum Exporting Countries’ (OPEC) decision to delay a crucial meeting on production cuts that was originally scheduled for the weekend. The West Texas Intermediate (WTI) contract for January dropped by $3.27 to $74.50 a barrel, while the Brent contract for January fell by $3.32 to $79.13 a barrel. The meeting, which is now delayed until next Thursday, faced challenges related to Saudi dissatisfaction with the production levels of other OPEC members. Compliance with production quotas is a significant challenge for OPEC and its allies (OPEC+), with expectations of weak compliance going forward, particularly citing Russia’s need to finance its involvement in the war in Ukraine. Despite OPEC+ already removing 5.16 million barrels per day from the market since 2022, including voluntary cuts from Saudi Arabia and Russia, oil prices, especially Brent, have fallen below $80 a barrel in recent weeks. Goldman Sachs anticipates OPEC using its pricing power to maintain Brent in a range of $80 to $100 a barrel. Analysts largely expect OPEC+ to extend the current production cuts into 2024, with the possibility of deeper cuts not being ruled out based on current market conditions. Additionally, a four-day ceasefire agreement between Israel and Hamas was reached to facilitate the release of hostages held in Gaza, contributing to considerations in the oil market.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/11/22/us-crude-oil-tumbles-below-75-a-barrel-after-opec-delays-meeting.html
