Oil prices tumble as OPEC+ meeting delay sparks concerns over production cuts

Crude oil prices tumbled for the second consecutive session. The prices fell over 1% during early trade on Thursday. WTI crude prices are trading at $76.07 marking a 1.34% decrease, while Brent crude prices stand at $80.78 reflecting a 1.44% decline. This downward trend follows the news that the Organisation of the Petroleum Exporting Countries (OPEC+) and their allies including Russia rescheduled their meeting on oil production to November 30. The postponement has left questions about the reduction in oil production and future supplies unanswered.

“Crude oil exhibited significant volatility, experiencing a further decline following the postponement of the OPEC+ policy meeting to November 30. Disagreements among OPEC+ members regarding additional output cuts contributed to the downward pressure on crude oil prices. The US weekly inventory data also played a role in the decline, with crude oil inventories increasing by 8.7 million barrels in the past week, surpassing the expected 0.9 million barrel rise,” said Rahul Kalantri, VP Commodities, Mehta Equities.

Rahul Kalantri further added that, “the dollar index rebounded from a three-month low, exerting downward pressure on oil prices. Anticipating ongoing volatility, we project that crude oil prices will remain unpredictable in today’s session. The support for crude oil stands at $75.30–74.40, with resistance at $77.00-77.70 for today’s session. In terms of Indian Rupees (INR), crude oil finds support at Rs 6,300-6,230 and faces resistance at Rs 6,460-6,540.”

The other major reason has brought the fluctuation in the crude oil prices is the reducing demands from China which happens to be the world’s biggest importer of Oil. China’s oil demand growth is likely to ease in the first half of 2024 to around 4%, according to consultancies, with resurgent consumption from the aviation and petrochemical sectors offset by weaker diesel usage due to an ongoing property sector crunch, according to Reuters.

Another concurrent event that brought fluctuation in oil prices is the ongoing geopolitical tensions in the Gulf region. Geopolitical tensions in the Middle East continue to simmer due to the Israel-Hamas conflict; however, the war is being seen as largely contained. Moreover, while market analysts closely monitor the situation, anticipating further reactions to the rescheduled OPEC+ meeting, investors await clarity on the future trajectory of oil production and its potential impact on global supplies, contributing to the current volatility in the energy markets.