Oil extends losses after Opec+ postpones meeting

London — Oil prices dipped on Thursday, extending losses from the previous session, after Opec+ postponed a meeting, triggering speculation that the group will maintain current output as several African members are opposed to further cuts.

Brent futures were down 85c, or about 1%, at $81.11 a barrel by 9.16am GMT, after falling as much as 4% on Wednesday. West Texas Intermediate slid 71c, also about 1%, to $76.39, after declining as much as 5% in the previous session.

Opec+, which comprises the organisation and allies including Russia, caught markets by surprise on Wednesday when it delayed a ministerial meeting to November 30. Producers — mainly three African countries — were struggling to agree on output levels and hence possible reductions next year before the meeting originally set for November 26, Opec+ sources said.

Analysts said Angola, the Republic of the Congo and Nigeria were seeking to increase their 2024 supply quotas above the provisional levels agreed at an Opec+ meeting in June.

Angola and Congo have been producing below their 2024 production targets, while Nigeria has been able to increase output above target due to the improving security situation in the oil-rich Niger Delta.

“We think Nigeria can be assuaged as the leadership values its long-standing Opec membership and improving ties with Saudi Arabia,” said Helima Croft, an analyst at RBC Capital Markets.

“However, it may be more difficult to bridge the gap with Angola, which has been a moodier member of the producer group since it joined in 2007.”

Though internal upheavals have been quelled effectively in the past, the latest episode lays bare the enormity of the task that Opec+ must accomplish, said Tamas Varga of oil broker PVM.

“What is certain is continuous volatility with a plausible price swing to the extent of $10+ after next Thursday’s meeting and possibly even before,” he said

The questions about Opec+ supply come as data showed US crude stocks jumped by 8.7-million barrels last week, much more than the 1.16-million increase analysts had expected.

Meanwhile, about 3% of crude oil production in the Gulf of Mexico was shut in by an underwater pipeline leak, the US Coast Guard said on Wednesday.

On the demand side, there was more bleak news. Though a survey showed the downturn in eurozone business activity eased in November, data suggests the bloc’s economy will contract again this quarter as consumers continue to rein in spending.

US trade is expected to be muted on Thursday due to the Thanksgiving public holiday. 

Reuters