Oil prices dip in pre-Thanksgiving trade ahead of OPEC+ cuts

[November 22, 2023]  By Paul Carsten

LONDON (Reuters) -Oil prices slipped on Wednesday in quiet pre-U.S. Thanksgiving holiday trading, as the market awaited news on output cuts from the OPEC+ producers group and looked for confirmation of a sharp build-up in U.S. crude stocks.

Brent crude futures fell 95 cents to $81.50 a barrel by 1149 GMT. U.S. West Texas Intermediate crude futures were down 92 cents to $76.85. Both benchmarks had lost $1 in earlier trading.

The benchmarks have fallen for four straight weeks, and prices weakened further last week on growing concerns about the demand outlook.

Investors remained cautious ahead of Sunday's scheduled OPEC+ meeting, when the producer group may discuss deepening supply cuts due to slowing global economic growth.

On Monday, both contracts climbed about 2% after three OPEC+ sources told Reuters the group, the Organization of the Petroleum Exporting Countries and allied producers, was set to consider more oil supply cuts when it meets on Nov. 26.
 

"The upcoming meeting has been the key central focus for oil prices for now, with sentiments shrugging off the sharp build in U.S. crude inventories," said Jun Rong Yeap, a market strategist at IG.

OPEC+ is likely to extend or even deepen oil supply cuts into next year, analysts have predicted.

To support prices, OPEC and its allies will need to not only extend, but increase cuts, said John Evans of oil broker PVM in a note on Wednesday.

"A rollover of cuts and voluntary cuts will send the market south, for the current level of supply clamp is not enough to persuade the market that it is 'tight'," he said. "Oil is in for some tense and headline-reactive days."

The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. Picture taken November 22, 2019. REUTERS/Angus Mordant/File Photo

Earlier this week, an OPEC technical panel invited a top financial market dealer to give a presentation, seen by Reuters, which painted a bearish outlook for the oil market.

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) oil markets and industry division said on Tuesday.

U.S. crude stocks rose by nearly 9.1 million barrels in the week ended Nov. 17, according to market sources citing American Petroleum Institute figures on Tuesday. [EIA/S] [API/S]

Gasoline inventories dropped by about 1.79 million barrels, while distillate inventories fell by about 3.5 million barrels.

U.S. government data on stockpiles is due on Wednesday.

Additionally, U.S. oil refiners are expected to increase available refining capacity by 496,000 barrels per day for the week ending Nov. 24, research company IIR Energy said on Wednesday.

Thursday is a public holiday in the United States for Thanksgiving.

(Reporting by Paul Carsten in London and Laura Sanicola and Colleen Howe; Editing by Kim Coghill, Bernadette Baum and Louise Heavens)

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