Oil prices edged lower on Monday, with global benchmark Brent trading below the $80 level ahead of the Organization of the Petroleum Exporting Countries’ (OPEC) decision on output.
January contract Brent crude oil futures slipped 0.72% to $79.90 per barrel, while the US West Texas Intermediate (WTI) crude futures for the same contract shed 0.79% to $74.94 per barrel.
The two benchmarks posted their first weekly rise in five in the previous week due to the prospect of Saudi Arabia and Russia extending voluntary supply reductions to next year and OPEC and their allies (OPEC+) possibly considering further cuts.
Crude prices fell in the middle of the prior week after the producer group delayed the policy meeting by four days to November 30 from November 26 to resolve matters concerning 2024 production quotas for African members.
Four OPEC+ sources stated on Friday that the OPEC was near reaching a compromise since the postponement.
2024 Surplus in Oil Markets Expected
Investors kept a skeptical view on the oil market considering the issue within OPEC+ about output targets, although analysts see Saudi Arabia rolling over another 1 million barrel per day (bpd) supply reduction into next year.
Should that outlook not occur, more downward pressure on oil prices could be expected, considering the surplus over the first quarter of 2024.
Prior the meeting, the OPEC members’ exports forecast dropped to 1.3 million bpd, below April levels, but aligned with the group’s supply targets.
However, the United Arab Emirates (UAE) plans to increase Murban crude exports early next year in preparation for its higher production quotas and as barrels are rerouted to the global market due to refinery maintenance.
While OPEC and its allies intend to continue cuts until next year, the International Energy Agency (IEA) still expects oil markets worldwide to see a small surplus in 2024.
The IEA estimates global oil demand growth at 0.9 million bpd next year, lower than the 2.4 million bpd surge in 2023, calling for a major supply discipline from OPEC or influence such capability to ease concerns over a significant surplus in markets in 2024.
