WTI crude steadies as OPEC+ considers further cuts
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The oil market is closely watching the developments within OPEC+ as the group prepares for a virtual meeting on November 30 to discuss potential production cuts. This comes in the wake of a significant increase in US crude inventories and amid expectations of a Chinese stimulus that could impact demand.
- WTI crude oil was trading at $76.50 on Friday, as OPEC+ confirmed it would hold a virtual meeting next Wednesday to deliberate on production strategies. The group, including key player Saudi Arabia, is contemplating maintaining its current output cut of 1 million barrels per day into the next year. This decision is influenced by recent declines in oil prices, and there are discussions about the possibility of further reductions by OPEC+ members.
- The Energy Information Administration (EIA) reported an unexpected surge in US crude inventories, with an increase of 8.7 million barrels for the week ending November 17. This figure starkly contrasts with market expectations, which had predicted a much smaller rise of just 0.9 million barrels.
- The anticipation of a Chinese economic stimulus targeting real estate firms, such as Country Garden Holdings, has been factored into market sentiments. Given China’s significant role as a consumer in the oil market, such measures could help counteract the downward pressure on WTI prices.
- Additionally, market participants are awaiting the upcoming release of US S&P Global PMI data. Forecasts indicate slight contractions in both Manufacturing and Services indices, which could further influence global oil demand and pricing dynamics.
The outcome of OPEC+’s meeting and the subsequent decisions on production levels will be critical for the direction of oil prices as the market heads into the final month of 2023.
