Oil futures finished higher Tuesday for the first time in five sessions, as traders await a meeting this week of the Organization of the Petroleum Exporting Countries and its allies, including Russia.
Price action
-
West Texas Intermediate crude for January delivery
CL.1,
-0.15% CL00,
-0.15% CLF24,
-0.15%
rose $1.55, or 2.1%, to settle at $76.41 a barrel on the New York Mercantile Exchange. -
January Brent crude
BRNF24,
-0.18% ,
the global benchmark, added $1.70, or 2.1%, to settle at $81.68 a barrel on ICE Futures Europe. February Brent
BRN00,
-0.23% BRNG24,
-0.23% ,
the most actively traded contract, gained $1.60, or 2%, to end at $81.47 a barrel. -
December gasoline
RBZ23,
-0.16%
tacked on 2.3% to $2.23 a gallon, while December heating oil
HOZ23,
-0.43%
added 2.4% to $2.91 a gallon. -
Natural gas for December delivery
NGZ23
settled at $2.71 per million British thermal units, up nearly 3.2% on the contract’s expiration day.
Market drivers
OPEC+ will hold an online meeting Thursday, after moving last week to delay an in-person gathering in Vienna that was set for Nov. 26. The decision last week to postpone sent oil tumbling last week amid speculation around a potential rift.
Which way the oil market breaks will largely depend on if OPEC+ can
“show continued unity as a group and commitment to ‘ stable’ (or really ‘higher’) prices over the long run,” analysts at Sevens Report Research wrote in Tuesday’s newsletter.
“If Thursday’s decision instills confidence in their ability to support prices effectively, then oil could make a run back into the mid-$80s or beyond,” they said. “However, if the group shows a fractured membership, then new 2023 lows are almost a certainty with a drop into the $50s well within the realm of possibility.”
News reports have said the delay came as African OPEC members objected to calls to reduce quotas, prompting negotiations ahead of the meeting. Saudi Arabia in July implemented a voluntary cut of 1 million barrels a day on top of existing reductions, a move that was credited with lifting crude sharply over the summer. Oil futures have subsequently pulled back sharply from 2023 highs set in late September on worries about the demand outlook.
The extension of additional voluntary cuts by Saudi Arabia would likely erase an expected crude surplus in the first quarter of next year, but if OPEC+ wants to provide more solid support to the market and ensure that stocks don’t build early next year, they need to agree on deeper and broader cuts, Warren Patterson and Ewa Manthey, commodity analysts at ING, said in a Tuesday note.
“The Saudis and OPEC+ have made a habit of surprising markets in recent years when it comes to their meetings. However, with aggressive cuts already in place, it does leave one wondering the degree to which the group could surprise the market with deeper-than-expected cuts,” they wrote.
Read: What an OPEC+ ‘flood the market’ scenario may do to oil prices
Traders also looked ahead to Wednesday’s weekly U.S. petroleum supply data from Energy Information Administration.
On average, analysts polled by S&P Global Commodity Insights expect the government agency to report a decline of 700,000 barrels in commercial crude inventories for the week ended Nov. 24. They also expect to see a weekly climb of 200,000 barrels in gasoline supplies and a 100,000-barrel fall in distillate stockpiles.
Read the full article here
