Oil prices fell on Monday, with the Brent benchmark dipping below $80 a barrel as investors awaited this week’s OPEC+ meeting and expected curbs on supplies into 2024.
Brent crude futures were down 60 cents, or 0.7%, at $79.98 a barrel. U.S. West Texas Intermediate (WTI) crude futures lost 68 cents, or 0.9%, to $74.86. Both contracts lost $1 in early trading.
Last week, prices tumbled when OPEC+ – the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – postponed to Nov. 30 a ministerial meeting to iron out differences on production targets for African producers.
Since then the group, helmed by de facto leader Saudi Arabia, has moved closer to a compromise, four OPEC+ sources told Reuters on Friday. OPEC+ is looking at deepening oil production cuts despite its policy meeting being postponed to this Thursday, an OPEC+ source said on Monday.
“Although there are headlines that Saudi has made progress reaching consensus, there is limited risk appetite to buy crude ahead of the formal announcement,” said Rebecca Babin, senior energy trader at CIBC Private Wealth US.
“Until we get clarity on how this plays out, expect crude to struggle to rally,” she added.
ING analysts said they expected Saudi Arabia to roll over its additional voluntary cut of 1 million barrels per day (bpd) into next year, and Russia to extend its own cuts.
“Clearly, if we do not see this, it would put further downward pressure on the market,” they said in a note.
Estimated exports by OPEC countries have declined to 1.3 million bpd below levels in April, Goldman Sachs analysts said in a note, in line with the group’s supply targets.
“We still expect an extension of the unilateral Saudi and Russia cuts through at least the first quarter of 2024,” the bank added.
The United Arab Emirates, however, is poised to ramp up exports of Murban crude early next year, according to traders and Reuters data.
Efforts by Iraq to resume northern crude exports via Turkey continue. Iraqi oil officials will meet representatives of international oil companies and Iraqi Kurdish officials in early December to discuss contract changes central to the issue, a deputy minister said.
The International Energy Agency said it expects a slight surplus in global oil markets in 2024 even if OPEC+ nations extend their cuts into next year.
Higher crude stockpiles in the United States have also put downward pressure on prices, analysts said. However, four analysts polled by Reuters estimated on average that crude inventories fell by about 2 million barrels in the week to Nov. 24.
Meanwhile, mediator Qatar on Monday said a truce between Israeli and Hamas forces in Gaza had been extended by two days, continuing a pause in seven weeks of warfare. The Middle East crisis had impacted oil prices as investors worried about impacts on supply.
Money managers cut their net long U.S. crude futures and options positions in the week to Nov. 21, the U.S. Commodity Futures Trading Commission said on Monday.