Oil slips after delayed Opec+ meeting sows uncertainty

Houston/Beijing — Oil prices fell by more than 1% on Thursday, extending losses from the previous session, after Opec+ postponed a ministerial meeting, leading to speculation that producers might cut output less than earlier expected.

Brent futures were down $1.04, or 1.3%, at $80.92 a barrel by 2.30am GMT, after falling as much as 4% on Wednesday. US West Texas Intermediate crude dipped 90c, or 1.2%, to $76.20, after declining as much as 5% in the previous session.

Trade was expected to remain muted due to the Thanksgiving holiday in the US.

In a surprise move, oil cartel Opec and allies including Russia delayed to November 30 a ministerial meeting where they were expected to discuss oil output cuts.

Producers were struggling to agree on output levels and hence possible reductions ahead of the meeting originally set for November 26, Opec+ sources said.

Three Opec+ sources, however, said this was linked to African countries, which are smaller producers in the group, which somewhat eased investor concerns.

Analysts said that Angola, Congo and Nigeria were seeking to raise their 2024 supply quotas above the provisional levels agreed at the Opec+ June meeting.

“At that meeting, Opec squared the books on increasing UAE’s quota … by reducing the targets for the African nations that were underperforming their required production numbers,” said Helima Croft, an analyst at RBC Capital Markets in a client note.

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…. 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,” said RBC’s Croft.

“Disagreement between members will likely increase volatility within the market over the course of the next week,” ING Bank analysts said in a note.

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

US oil rigs remained unchanged at 500 in the week to November 22, energy services firm Baker Hughes said in its closely followed report on Wednesday.

Meanwhile, about 3% of crude oil production in the Gulf of Mexico, or about 61,165 barrels of daily output, was shut in by an underwater pipeline leak, the US Coast Guard said on Wednesday.

Reuters