Oil prices fall as OPEC postpones its meeting
Oil futures plunged on Wednesday after OPEC postponed an upcoming meeting, but recovered during the afternoon. West Texas Intermediate (CL=F) futures fell less than 1% to settle above $77 a barrel.
Yahoo Finance’s Ines Ferre reports:
OPEC+, a Saudi-led consortium of the world’s largest oil producers, announced it would postpone its upcoming meeting from November 26 to November 30, increasing uncertainty over the group’s plans for further production cuts.
“She [OPEC] want to reach a consensus before they see each other,” Ed Hirs, a senior fellow at the University of Houston, told Yahoo Finance on Wednesday morning.
The announced delay could be a sign that member countries are out of sync on their next steps.
“I think that means they’re having a hard time convincing everyone to accept the idea of further cuts across the board,” Stewart Glickman, energy equity analyst at CFRA Research, told Yahoo Finance on Wednesday about the delay.
Saudi Arabia, which is implementing unilateral cuts instead of a million barrels per day through the end of the year, is reportedly putting pressure on smaller OPEC+ members to contribute more to the cuts.
This year’s cuts are aimed at restricting global supply and keeping pressure on oil prices, which are about 20% below the 2022 average price.
“We see some scope for the group to scale back more, but we expect Saudi Arabia to demand additional barrels from other members to share the burden of adjustment,” wrote Helima Croft, head of global commodity strategy RBC Capital. in a note this week.
Market fundamentals could also add to uncertainty among OPEC+ members after the group was presented with a bearish outlook for the oil market this week. Materials from a leading financial trader reviewed by Portal show that the recent selloff in November was driven by poor sentiment among oil producers and airlines.
“Increasing the price in the face of weakening demand could further depress demand, which would result.” [in] “Still, the prices are lower,” noted Hirs of the University of Houston.
Originally posted 2023-11-22 22:06:31.