Oil Falls as OPEC+ Seeks to Resolve Pre-Meeting Output Dispute

By Bloomberg

Nov 24, 2023

image is BloomburgMedia_S4K8J0T1UM0W01_26-11-2023_11-16-08_638365536000000000.jpg

A construction worker at the Ngiri 3 well pad at the Tilenga project, operated by TotalEnergies EP Uganda, part of the East African Crude Oil Pipeline (EACOP), in Buliisa, Uganda, on Wednesday, Oct. 25, 2023. The $4 billion EACOP infrastructure will transport 16,000 barrels of oil a day from Western Uganda to Tanzania's Tanga port on the Indian Ocean coast. Photographer: Luke Dray/Bloomberg

Oil dropped after struggling for direction in a low-volume session as OPEC+ tries to resolve a disagreement over output quotas that forced the group to postpone a pivotal meeting.

The Organization of Petroleum Exporting Countries and its partners are reviewing the demands made on African members by an earlier deal, working to tweak the 2024 targets set for Angola and Nigeria, according to a delegate. Meanwhile, Hamas released 24 hostages held in Gaza under a four-day truce agreement with Israel, eroding the risk premium generated by the war.

The international benchmark Brent fell to settle below $81 a barrel after swinging in over a $2 range in low-liquidity trading. West Texas Intermediate extended declines from Wednesday; the contract did not settle on Thursday because of the US Thanksgiving holiday. 

“The oil price will probably tread water for the most part ahead of the meeting,” Commerzbank AG analysts including Barbara Lambrecht wrote in a note. Saudi Arabia “still appears willing to shoulder the lion’s share of the supply cut needed to stabilize the oil market.”

  

The production cartel was forced to delay a critical meeting amid the disagreement over production targets, casting a pall of uncertainty over the group’s policy for next year. The meeting initially planned for this weekend has been pushed to Nov. 30 and it’ll be an online session instead of in-person.

Crude is on course for a back-to-back monthly loss, with prices down about 20% from a high in late September. The drop has been driven by signs of increased supplies from non-OPEC+ countries, rising US stockpiles and the fading of the premium generated by the Israel-Hamas war. Meanwhile, the International Energy Agency sees the market tipping back into surplus next year.

©2023 Bloomberg L.P.

By Julia Fanzeres , Alex Longley

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