Insider information from the producer group indicated that it plans to prolong its current output cuts until the end of the first quarter during its meeting on December 5.
Goldman Sachs analysts noted, “With improved compliance in production cuts from Russia, Kazakhstan, and Iraq, alongside the lower Brent price levels and various press reports, we anticipate an extension of OPEC+ production cuts until April.”
OPEC+, which comprises the Organization of the Petroleum Exporting Countries and its allies, including Russia, aims to gradually reduce production cuts by the first quarter of 2025. However, the prospect of surplus supply continues to exert downward pressure on prices, with the group responsible for approximately half of global oil production.
Priyanka Sachdeva, a senior market analyst at Phillip Nova, stated, “There seems to be no alternative but to postpone it,” suggesting that any extension might only last a month due to significant pressure from member nations to increase output.
In light of the absence of strong bullish drivers and subdued demand, Sachdeva predicts that oil prices will likely remain within a limited range, with a tendency toward a downward trend.
The outlook for consumption appears to be weak, with projections indicating that China's crude imports may reach their peak as early as next year, coinciding with a decline in transport fuel demand from the world's largest crude importer. This situation is likely to widen the existing gap between demand and supply, according to researchers and analysts.
Additionally, concerns regarding the US Federal Reserve's potential decision not to lower interest rates at its December meeting have placed a ceiling on oil prices, counteracting the positive developments from China, where the purchasing managers' index climbed to a seven-month high in November.
Last week, oil prices on both sides of the Atlantic experienced a decline of over 3 percent.
Federal Reserve Governor Christopher Waller, whose opinions are often indicative of US monetary policy trends, expressed a tendency to support another rate cut this month. However, Atlanta Federal Reserve President Raphael Bostic emphasized the need to consider forthcoming employment data.
The US-brokered ceasefire in the Middle East between Israel and Hezbollah is exhibiting instability, evidenced by nine fatalities resulting from strikes in two southern Lebanese towns following Hezbollah's missile attack on an Israeli military position within the disputed Shebaa Farms region on Monday.
Early polling data from Reuters suggests a probable decline in US crude oil inventories last week, while gasoline and distillate stockpiles are anticipated to have risen. The American Petroleum Institute and the Energy Information Administration will publish their weekly reports on Tuesday and Wednesday, respectively.