Oil prices experienced a decline on Wednesday amid subdued pre-U.S. Thanksgiving holiday trading, with the market eagerly anticipating updates on output cuts from the OPEC+ producers group and seeking confirmation of a significant buildup in U.S. crude stocks.
Brent crude futures dipped by 95 cents to reach USD 81.50 a barrel, and U.S. West Texas Intermediate crude futures saw a decrease of 92 cents, reaching USD 76.85. Both benchmarks had earlier lost USD 1 in trading, marking the fourth consecutive week of declines, with concerns about the demand outlook contributing to weakening prices.
Investors maintained a cautious stance leading up to the OPEC+ meeting scheduled for Sunday, where the producer group is expected to discuss the potential deepening of supply cuts in response to slowing global economic growth.
Monday saw a brief 2% increase in both Brent and WTI crude contracts following reports that OPEC+ was considering additional oil supply cuts during the upcoming meeting. However, uncertainties persist, John Evans of oil broker PVM commented, “A rollover of cuts and voluntary cuts will send the market south, for the current level of supply clamp is not enough to persuade the market that it is ‘tight.’ Oil is in for some tense and headline-reactive days.”
Earlier in the week, an OPEC technical panel presented a bearish outlook for the oil market, further contributing to market unease. Even if OPEC+ nations extend their cuts into the next year, the head of the International Energy Agency’s (IEA) oil markets and industry division noted on Tuesday that the global oil market is expected to have a slight supply surplus in 2024.
In the U.S., market sources citing American Petroleum Institute figures revealed a significant rise in crude stocks by nearly 9.1 million barrels in the week ending November 17. Gasoline inventories decreased by about 1.79 million barrels, while distillate inventories fell by approximately 3.5 million barrels. Additional insights into stockpiles are expected with the release of U.S. government data on Wednesday.
Adding to the complexity of the situation, U.S. oil refiners are projected to increase available refining capacity by 496,000 barrels per day for the week ending November 24, according to research company IIR Energy. The combination of these factors creates an environment of uncertainty and volatility in the oil market, with market participants closely watching developments in the coming days.