Oil prices were little changed on Wednesday as traders became vigilant ahead of the ministerial meeting with the Organization of the Petroleum Exporting Countries (OPEC) and its members, while a severe winter storm in the Black Sea led to a potential supply disruption.
February contract Brent crude oil futures was steady at $81.47 per barrel, while January contract US West Texas Intermediate (WTI) crude oil futures rose 0.17% to $76.54 per barrel.
The global and US benchmarks increased around 2% on Tuesday on expectations that OPEC and its allies, including Russia (OPEC+), will decide to continue or expand reductions to oil supplies.
Worries about Kazakhstan’s oil production and a declining greenback have also supported crude prices in the previous day.
OPEC+ Meeting In Focus, Potential Disruption from Kazakhstan
Traders took short positions ahead of the OPEC+ meeting amid a prospect of supply disruption from Kazakhstan.
Concerns over tight inventories in the short term strengthened as a strong storm in the Black Sea hindered 2 million barrels per day (bpd) in crude exports from Kazakhstan and Russia.
The disruption has prompted Kazakhstan’s largest oilfields to cut their combined daily production by 56% from November 29, with the situation returning to normal currently uncertain.
Kazakhstan transports around 80% of oil to international markets from the Russian port of Novorossiysk through a pipeline run by the Caspian Pipeline Consortium (CPC).
The focus is on the group’s policy and outlook for oil demand toward the end of 2023, according to NS Trading president Hiroyuki Kikukawa. However, WTI may linger around the $76 level, with a $5 above or below range, for some time if OPEC and its members choose not to deepen output cuts.
OPEC+ will conduct its anticipated meeting online on November 30 to set production quotas for next year after postponing the assembly for four days due to troubles with the output targets of its African allies.
The group is reportedly expected to have tough discussions, while extending the existing deal is more likely than the additional reductions.
Should the group fail to reach a preliminary agreement, analysts Warren Patterson and Ewa Manthey stated that they cannot dismiss the possibility of a further delay in the meeting, which might weigh on oil prices.
The oil market’s 2024 outlook will significantly rely on OPEC+’s output decision, according to the two analysts.
In the US, data from the American Petroleum Institute (API) showed that supplies dropped 817,000 barrels for the week ending November 24, lower than economists forecast for a loss of 2 million barrels.
The reading was also compared with the accumulation of 9.1 million barrels posted the previous week.
