Oil Prices Fall Below $80 Amidst Uncertainties
Oil prices fell below $80 per barrel early Monday as members of the Organization of the Petroleum Exporting Countries (OPEC) and allies (OPEC+) prepared to meet later this week.
Meeting was postponed as Nigeria and Angola push for a higher output allowance. Both countries were given lower allowances in June after previously not being able to pump enough to meet their quotas.
The dispute over production quotas for next year heightened supply uncertainties amid higher demand expectations during the first quarter of 2024.
Brent traded at $79.81 per barrel, a 0.83% decrease from the closing price of $80.48 a barrel in the previous trading session on Friday.
The American benchmark, West Texas Intermediate (WTI), traded at the same time at $74.90 per barrel, down 0.84% from Friday’s close of $75.54 per barrel.
Brent oil fell below Saudi Arabia’s floor price of $80 a barrel, raising the possibility of a rollover of the current production cuts or a further increase to these levels.
Saudi Arabia has been imposing an output cut of approximately 1.5 million barrels per day (bpd) that will continue until the end of the year, on top of its contribution to the group’s joint cut of 2 million bpd to extend until the end of 2024.
If OPEC+ production cuts continue, the average global oil supply is expected to reach 102.8 million barrels per day over that time. Despite production reductions, this represents a surplus of almost 1.3 million barrels per day.
Uncertainty in the market has further intensified after the group’s decision to postpone its much-anticipated meeting by four days, from Nov. 26 to Nov. 30, when decisions are expected over the production quotas to be imposed from January onwards.
There are divisions in the organization because some members want to expand production in response to forecasts of a rise in demand in the first quarter of next year. IPPIS: FG to Delist Unverified Workers on Oct. 27
Investors are now monitoring the statements of US Fed officials to seek direction about the next interest rate decision of the world’s largest economy, the US. Market players will also follow macroeconomic data from China.