Brent crude oil continued to rise on Wednesday, gaining 1.6% as the market focuses squarely on the OPEC+ meeting scheduled for Thursday, with analysts increasingly anticipating additional output restrictions on some level from the cartel.
On Wednesday at 2:39 p.m. ET, Brent crude was trading at $82.99, up 1.60% for a $1.31 per barrel gain on the day. West Texas Intermediate (WTI) was trading at $77.70, up 1.69% for a $1.29 per barrel gain on the day.
The key drivers of rising oil prices have been media reports that OPEC+ was considering additional output cuts of up to 1 million barrels per day, on top of the existing, voluntary 1-million-per-day cuts. An unnamed OPEC+ source also told Reuters on Monday that the cartel was considering bigger oil output cuts and expected an option for a “collective further reduction” during the next meeting.
Later on Wednesday, two OPEC+ sources told Reuters that under discussion was a deeper collective supply cut for Q1 2024, though volume and time period remained unclear and it was possible that an agreement would not be reached on Thursday.
Wednesday’s rise in crude prices comes despite the fact that crude oil inventories in the United States fell this week by 817,000 barrels for the week ending November 24, according to The American Petroleum Institute (API), after a 9.05-million-barrel rise in crude inventories in the week prior. Analysts had expected a 2 million barrel draw.
This inventory build was softened not only by OPEC+ anticipation, but also by a severe storm in the Black Sea region that has taken 2 million barrels per day of Russian and Kazakh exports offline. Also on Wednesday, Bloomberg reported that Saudi Arabia is set to lower its official selling price for crude for Asian buyers amid increased competition for the Asian market and cheaper U.S. crude. OPEC+ delayed its meeting originally scheduled for November 26 by four days, to November 30, amid a quota target dispute with African nations. It remains unclear whether these differences have been reconciled as of the time of writing, with the meeting now only hours away.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com