🤑 It doesn’t get more affordable. Grab this 60% OFF Black Friday offer before it disappears…CLAIM SALE

Oil settles up 2%; focus on OPEC+, storm-hit Kazakh output

Published 11/27/2023, 09:05 PM
Updated 11/28/2023, 03:11 PM
© Reuters. FILE PHOTO: A person puts gas in a vehicle at a gas station in Manhattan, New York City, U.S., August 11, 2022. REUTERS/Andrew Kelly/File Photo
LCO
-
CL
-

By Stephanie Kelly

NEW YORK (Reuters) -Oil prices jumped on Tuesday, settling up about 2% on the possibility OPEC+ will extend or deepen supply cuts, a storm-related drop in Kazakh oil output and a weaker U.S. dollar.

Brent crude futures settled up $1.70, or 2.1%, at $81.68 a barrel. U.S. West Texas Intermediate (WTI) crude gained $1.55, or 2.1%, to settle at $76.41.

OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, is due to hold an online ministerial meeting on Thursday to discuss 2024 production targets.

The talks will be difficult and a rollover of the previous agreement is possible rather than deeper production cuts, four OPEC+ sources said.

The market tumbled last week when OPEC+ pushed back the original date for its meeting to iron out differences on production targets for African producers.

"We believe the market's primary focus surrounds the continuation of Saudi Arabia's additional voluntary cuts of 1 million barrels per day," Walt Chancellor, an energy strategist at Macquarie, said in a note. "We believe an extension of these cuts into Q2/Q3 2024 may represent the threshold for this meeting being viewed bullishly."

One possible compromise could involve Angola and Nigeria accepting reduced production targets for a few months if targets for the other countries were likewise lowered, said Commerzbank (ETR:CBKG)'s Carsten Fritsch.

"According to delegates, Saudi Arabia is demanding lower production quotas from the other OPEC+ countries. While Kuwait has signaled that it would be willing to do so, some countries are apparently resisting any such move."

The United Arab Emirates is likely to oppose this, given that its 2024 production target was increased at its urging when OPEC+ held its previous meeting in early June, he added.

Oil also found support from a weak dollar, an expected decline in U.S. crude inventories and the drop in Kazakh output.

Kazakhstan's largest oilfields have cut their combined daily oil output by 56%.

Four analysts polled by Reuters estimated that the latest round of weekly U.S. supply reports will show crude inventories fell by about 900,000 barrels.

The first of this week's two reports is due at 2130 GMT from the American Petroleum Institute.

The U.S. dollar sank to a three-month low on Tuesday after U.S. Federal Reserve Governor Christopher Waller flagged the possibility of lowering the Fed policy rate in the months ahead if inflation declines further.

© Reuters. FILE PHOTO: A person puts gas in a vehicle at a gas station in Manhattan, New York City, U.S., August 11, 2022. REUTERS/Andrew Kelly/File Photo

A weaker dollar typically bolsters oil demand, making dollar-denominated oil less expensive for buyers using other currencies.

In the Middle East, Israeli forces and Hamas fighters held their fire beyond the original deadline of a truce, extended at the last minute by at least two days to let more hostages go free.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.