Crude oil prices experienced a significant surge, closing up over 2% on Monday, November 20th, buoyed by growing anticipation of forthcoming production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied nations, collectively known as OPEC+.
In a notable uptick, WTI crude oil futures climbed by $1.71, marking a 2.3% increase, closing at $77.60 per barrel. Simultaneously, BRENT crude oil futures also rose by $1.71, up 2.1%, ending the day at $82.32 per barrel.
Reports from within OPEC suggested a strong likelihood of further production cuts being deliberated during the OPEC+ meeting scheduled for November 26th. The current proposal under consideration aims to deepen the existing reduction in production, previously agreed upon at 3.66 million barrels per day until the conclusion of 2024.
This news acted as a catalyst for the rebound in oil prices after enduring a downward trend. Both WTI and Brent crude oil prices had witnessed consecutive declines over four weeks, dropping by more than 1%. These declines were primarily attributed to concerns surrounding market demand, exacerbated by apprehensions that the conflict between Israel and Hamas might not confine its impact solely within the region.
Analysts, including Amrita Sen from Energy Aspects, have speculated on the potential actions of Saudi Arabia, the world’s top oil producer. Sen predicted that Saudi Arabia might extend its voluntary production cuts until the initial quarter of 2024 or could potentially deepen the cuts, extending them through the first half of next year.
Looking ahead, market participants are eagerly awaiting the release of the American Petroleum Institute (API) crude oil stocks data today, with further attention on the official crude stock figures from the U.S. Energy Information Administration (EIA) scheduled for Wednesday.
This surge in oil prices reflects a heightened market focus on potential supply adjustments by major oil-producing nations, set against a backdrop of evolving geopolitical tensions and market demand uncertainties.
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Tuesday, November 21, 2023