Oil ticks higher ahead of OPEC+ policy decision; Brent at $82/bbl

Brent crude futures were up 61 cents, or 0.8 per cent, to $82.29 a barrel. US West Texas Intermediate (WTI) crude futures gained 75 cents, or 1 per cent, at $77.16 a barrel, according to news agency Reuters. Both benchmarks rose about 2 per cent on Tuesday as the market anticipated that OPEC would extend or deepen supply cuts.

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a December 18 expiry, was last trading higher by 0.55 per cent at ₹6,448 per bbl, having swung between ₹6,323 and ₹6,500 per bbl during the session so far, against a previous close of ₹6,413 per barrel.

What’s driving crude oil prices?

-OPEC+ and its oil majors are currently holding talks and negotiations are going on, but no further delay is expected, according to Reuters. The OPEC+ group surprised the market last week by delaying its November 26 to November 30 after the oil producers struggled to reach a consensus due to disagreement over output quotas by the African oil-producing countries.

Also Read: OPEC+ to announce oil output policy decision on November 30: From deeper cuts to capacity levels—What’s on agenda?

-A severe storm in the Black Sea region has disrupted up to 2 million barrels per day (bpd) of oil exports from Kazakhstan and Russia, according to state officials and port agent data, raising the prospect of short-term supply tightness. 

-Kazakhstan’s largest oilfields are cutting combined daily oil output by 56 per cent from November 27, said the Kazakh energy ministry. The oil market also found support from a drop in US crude inventories, which fell by 817,000 barrels last week, according to Reuters.

-Meanwhile, US Commerce Department data showed the US economy grew faster than initially thought in the third quarter, but momentum appears to have since waned as higher borrowing costs curb hiring and spending.

-The official data showed gross domestic product (GDP) increased at a 5.2 per cent annualised rate last quarter, revised up from the previously reported 4.9 per cent pace, its fastest pace of expansion since the fourth quarter of 2021.

Where are prices headed?

Crude oil prices rebounded from their recent lows in anticipation of the upcoming OPEC+ meetings and the dollar index’s decline. The market anticipates potential agreements among OPEC+ members to implement additional output cuts in response to the significant decline in crude oil prices, which could provide support at lower levels, according to analysts.

The recovery in crude oil prices was further fueled by dovish comments from Fed member Waller and the weakening dollar index, which reached nearly four-month lows, contributing to the support for crude oil prices. 

‘’This week, we anticipate volatility in crude oil prices due to fluctuations in the dollar index and the ongoing OPEC+ meetings. The support levels for crude oil are identified at $75.85–75.10, with resistance expected at $77.20-77.90. In terms of INR, crude oil is likely to find support in the range of ₹6,330-6,250, while resistance is projected at ₹6,480-6,540,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd

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Updated: 29 Nov 2023, 10:32 PM IST