OPEC+ will now hold its ministerial meeting on November 30, instead of November 26 as previously scheduled. The unexpected announcement by the oil producer group came today with no reason for the postponement.
Brent crude futures was down $3.39, or 4.1 per cent, to $79.06 a barrel. US West Texas Intermediate (WTI) crude futures were down $3.26, or 4.2 per cent, to $74.51, according to news agency Reuters.
Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a December 18 expiry, was last trading lower by 4.22 per cent at ₹6,195 per bbl, having swung between ₹6,170 and ₹6,506 per bbl during the session so far, against a previous close of ₹6,468 per barrel.
A decline in international crude oil prices will help control India’s inflationary pressures going forward, the country’s finance ministry said in a report on Tuesday. India’s retail inflation eased in October to a four-month low of 4.87 per cent, edging closer to the Reserve Bank of India’s target of 4 per cent.
India’s crude oil basket has averaged $83.93 a barrel in November so far, compared with $90.08 a barrel in October, showed government data. “The decline in international crude oil prices and continued moderation in core inflation are likely to control inflationary pressures going forward,” the monthly economic report said.
What’s weighing on crude oil prices?
-The meeting of OPEC+, which includes Saudi Arabia, Russia and other allies and members of the OPEC group of oil-producing countries, had been expected to consider further changes to a deal that already limits supply into 2024, according to analysts.
-Earlier this week, Bloomberg News reported that the OPEC+ meeting could be delayed for an unspecified period of time after Saudi Arabia expressed its dissatisfaction with other members about their output numbers. Analysts had predicted before the delay that OPEC+ was likely to extend or even deepen oil supply cuts into next year.
-Even if the OPEC+ nations extend their cuts into next year, the global oil market will see a slight supply surplus in 2024, the head of the International Energy Agency’s (IEA) Fatih Birol said on Tuesday.
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-Both Brent and WTI oil benchmarks have fallen for four straight weeks on demand concerns. Brent is down from near $98 in late September – pressured by rising supplies and concern about demand and a potential economic slowdown.
-The two oil contracts had climbed about 2 per cent on Monday after analysts speculated that OPEC+ will extend its voluntary oil output cuts till the first quarter of 2024, in order to support prices.
-Some analysts have pointed to possible discord between top oil exporter Saudi Arabia — which has lobbied for production cuts to support prices — and Russia.
Where are prices headed?
Crude oil exhibited significant volatility, experiencing a decline from its peak levels influenced by discouraging US existing home sales data and the minutes from the Federal Reserve meeting, according to analysts.
October witnessed a 4 per cent decrease in US existing home sales, and the Federal Reserve signalled a commitment to maintaining higher interest rates for an extended period, constraining the upward momentum of crude oil.
Traders are exercising caution in anticipation of the upcoming OPEC+ meeting scheduled for next week, as any announcements regarding an extension or deepening of output cuts could act as a catalyst for supporting crude oil prices.
‘’We anticipate continued volatility for crude oil. The support level is identified at $76.70–76.00, with resistance observed at $78.40-79.10. In terms of INR, crude oil finds support at ₹6,370-6,290 and faces resistance at ₹6,555-6,640,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
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Updated: 22 Nov 2023, 09:17 PM IST