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Oil dipped for a third day as investors turned their focus to an OPEC+ meeting on production policy after US crude stockpiles expanded.
Futures in New York edged toward US$80 a barrel after losing almost 4 per cent over the past two sessions. OPEC+ is gathering later Thursday (Nov 4) and the group is expected to stick to its planned gradual output hike for December, despite calls from consumers to pump more. In the US, crude inventories climbed for the fifth time in six weeks, according to Energy Information Administration (EIA)data.
The US and Iran, meanwhile, will resume talks later this month on reviving an agreement that imposed limits on Tehran’s nuclear program. A return of the accord would likely lead to increasing crude flows from the OPEC producer.
Oil recently rallied to the highest since 2014 as an economic rebound from the pandemic combined with an energy crunch to drive up demand for crude. US President Joe Biden has led calls from major consumers for OPEC+ to increase output to cool elevated prices, but Saudi Arabia and others in the alliance have pushed back, citing risks from ongoing coronavirus outbreaks.
OPEC+ is set to ratify a monthly increase of 400,000 barrels a day, continuing the gradual revival of production halted during the pandemic, according to a Bloomberg survey. While that’s been a consistent target for the alliance, some members – particularly Angola and Nigeria – have struggled to boost output.
“Prices are likely to remain choppy as speculation gains on OPEC+’s next move,” said Mr Will Sungchil Yun, senior commodities analyst at VI Investment Corp. “If OPEC+ decides to push forward with a 400,000-barrels-a-day increase as per initial expectations, then prices will be boosted once again.”
Nationwide US crude stockpiles rose by 3.29 million barrels last week, the EIA said. That’s more than the median forecast in a Bloomberg survey. Inventories at Cushing fell for a fourth week to 26.4 million barrels. Shrinking supplies at the hub – the delivery point for WTI futures – have sent gauges of market health, known as timespreads, soaring to the most bullish levels in years.
The US and Iran will resume nuclear talks Nov 29, with discussions taking place through European and Russian intermediaries, rather than face-to-face. It’s the first indication that President Ebrahim Raisi’s government is willing to test the waters with the US over easing sanctions.
