Oil rose slightly on Wednesday as investors remained cautious ahead of a key OPEC+ meeting that will decide production policy in the coming months and supply disruption caused by a storm in the Black Sea sent prices higher.
Brent crude futures were up 3 cents at $81.71 a barrel at 06:25 GMT. West Texas Intermediate (WTI) crude oil futures rose 17 cents, or 0.2%, to $76.58 a barrel.
Both indicators gained on Tuesday on concerns about the possibility that allies such as the Organization of the Petroleum Exporting Countries and Russia (OPEC+) could extend or deepen supply cuts, as well as Kazakh oil production and a weak U.S. dollar.
Investors closed short positions ahead of the OPEC+ meeting due to concerns about supply disruption in Kazakhstan. All eyes are on OPEC+ policy and demand outlook towards the end of this year, but unless OPEC+ significantly extends production cuts, WTI is expected to hover around $76, above and below $5 for a while.
OPEC+ will hold an online ministerial meeting on Thursday to discuss 2024 production targets after postponing the meeting to November 30. Some OPEC+ sources said the talks would be difficult and a renewal of the previous agreement was possible rather than deeper production cuts.
The outlook for the oil market in 2024 will largely depend on OPEC+ policy. If OPEC+ fails to reach a preliminary agreement, we cannot rule out the risk of further postponement of the meeting, which would likely put downward pressure on oil prices.
The premium for front-loaded Brent contracts on semi-annual loading rose to a two-week high; This indicates that concerns about supply shortfalls are increasing in the long term.
The severe storm in the Black Sea region disrupted 2 million barrels per day (bpd) of oil exports from Kazakhstan and Russia, raising concerns of a short-term supply crunch, data showed.
Kazakhstan’s largest oil fields have reduced total daily oil production by 56% as of November 27, Kazakhstan’s Ministry of Energy said.
Oil also found support from the weakness of the dollar and the decline in US crude oil stocks.
The dollar fell near a three-month low against major currencies on Wednesday as expectations grew that the Fed could start cutting interest rates early next year.
A weaker dollar often supports oil prices because it makes oil cheaper for those who hold other currencies.
Meanwhile, US crude oil inventories fell by 817,000 barrels last week, according to market sources citing figures from the American Petroleum Institute (API).
Crude oil inventories are estimated to have fallen by an average of 900,000 barrels in the week to November 24, according to analysts. The US government’s official weekly data on inventories will be published on Wednesday.