Brent rises ahead of OPEC+ decision on production

Brent crude futures rose on Friday, recouping some of the previous session’s losses, as traders tried to predict whether the OPEC+ alliance would reach an agreement that would lead to further production cuts.

According to Reuters, Brent crude futures rose 19 cents, equivalent to 0.23%, to $81.61, after falling 0.7% upon settlement in the previous session.

US West Texas Intermediate crude fell 45 cents, or 0.58%, to $76.65, compared to Wednesday’s close. There was no settlement for American crude on Thursday because it was a holiday in the United States

Both crude oils are heading to achieve their first weekly rise in five weeks, supported by expectations that the OPEC+ alliance, led by Saudi Arabia, may reduce supplies to achieve balance in the markets until 2024.

The coalition, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, surprised the market by announcing on Wednesday that it would postpone a ministerial meeting for 4 days until November 30, after producers faced difficulty in reaching consensus on production levels. ‎

“The most likely outcome now appears to be an extension of the current cuts,” IG market analyst Tony Sycamore wrote in a note.

The sudden postponement initially led to a decline in Brent crude futures contracts by up to 4%, and a decline in American crude oil by up to 5 percent in trading during Wednesday.

The near-term outlook for China appeared stronger, which supported market sentiment

“The recent Chinese data and new aid for the debt-laden real estate sector could be positive for the direction of the oil market in the near term,” said Tina Ting, a market analyst at CMC Markets.

Chinese stocks rose on Thursday thanks to expectations that the country will direct more stimulus to the faltering real estate sector

However, analysts say that these gains may be limited by the rise in crude inventories and weak refining margins in the United States, which leads to a decline in demand for crude oil from American refineries.

As for China, analysts say that oil demand growth may decline to about four percent in the first half of 2024 compared to strong growth levels after the Covid-19 pandemic in 2023, with the country’s real estate sector crisis affecting diesel use.