Investing.com — Oil prices traded sharply lower Wednesday after a group of top producers delayed its meeting to set output policy, creating uncertainty about future supply levels.
By 09:00 ET (14.00 GMT), the futures traded 4.2% lower at $74.53 a barrel, while the contract dropped 4% to $79.12 a barrel.
OPEC+ meeting postponed
The crude market had started the week on a firm note following reports that Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, was set to discuss cutting output levels further in their meeting over the weekend.
However, the news that the meeting has been postponed to Nov. 26 has created a great deal of uncertainty over future production levels, with traders seeing the postponement as evidence of disagreement between the principal players.
Saudi Arabia, Russia and other members of OPEC+ have already pledged oil output cuts of about 5 million barrels per day, or about 5% of daily global demand, in a series of steps that started in late 2022.
This figure includes a voluntary reduction by Saudi Arabia of one million barrels per day and a 300,000 barrels a day cut in Russian oil exports, both of which last until the end of 2023.
That said, even if OPEC+ extends the cuts into next year, the global oil market will still see a slight surplus of supply in 2024, said Toril Bosoni, the head of the International Energy Agency’s oil markets and industry division on Tuesday.
U.S. crude stockpiles soar – API
The oil market had already started the day on the backfoot after data from the suggested that U.S. stockpiles grew over 9 million barrels in the week to Nov. 17, substantially more than expectations for a build of 1.5 million barrels.
If confirmed by official data later in the session, this would be the fourth straight week of builds for U.S. after the Energy Information Administration confirmed last week, after a gap of a week due to systems upgrade, that crude stocks rose by 3.6 million barrels last week to 421.9 million barrels.
That release also showed U.S. crude production was holding at a record 13.2 million barrels per day that it hit in October.
This record level of U.S. supply is proving a headwind for the market, and posing a problem for OPEC+, as the U.S. appears to be taking market share away from the cartel’s top producers as they, and Saudi Arabia in particular, cut output to boost prices.
Dollar rebound weighs on crude
Also weighing on the market Wednesday was a slight rebound in the U.S. dollar after the publication of the from the early November Federal Reserve meeting.
Weakness in the dollar, which had dropped to a 2-½ month low earlier this week, has been a major support point for oil, which is priced in the greenback, as it makes the commodity cheaper for foreign buyers.
(Ambar Warrick contributed to this article.)
Read the full article here