Oil Rises Nearly 1% at Opening Ahead of OPEC+ Meeting
Oil prices rose nearly 1% on Tuesday as traders awaited the outcome of an OPEC+ meeting later this week.
Brent crude futures were up 66 cents, or 0.92%, trading at $72.49 per barrel, while the USOIL West Texas Intermediate (WTI) crude climbed 63 cents, or 0.93%, to $68.73 per barrel.
It is likely that OPEC+ will extend its latest round of production cuts until the end of the first quarter during its December 5 meeting, according to sources. With increased compliance from Russia, Kazakhstan, and Iraq, lower Brent prices, and signals from press reports, analysts expect the cuts to be extended through April.
OPEC+ Meeting
OPEC+, which accounts for nearly half of global oil production, has aimed to gradually reduce production cuts through 2025. However, concerns over a potential market surplus have placed downward pressure on prices, with Brent trading nearly 6% below its December 2023 average.
Rising pressure from member countries to boost output could limit any extension to just a few months. Additionally, the global oil demand outlook remains weak, with China’s crude imports projected to peak as early as next year, as transportation fuel demand begins to decline.
The market also anticipates that Saudi Arabia, the world’s largest exporter, may lower crude prices for Asian buyers to the lowest levels in at least four years, according to traders.
Other Concerns
Meanwhile, concerns over the U.S. Federal Reserve potentially holding off on rate cuts at its December meeting have further capped oil prices.
In the Middle East, the U.S.-brokered ceasefire between Israel and Hezbollah remains fragile. On Monday, nine people were killed in strikes on two southern Lebanese towns shortly after Hezbollah launched missiles at an Israeli military position in the disputed Shebaa Farms area.
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