Oil prices recorded a slight increase this Thursday, December 5, as the markets' attention focused on the OPEC+ meeting scheduled for the day. Investors are waiting to know the decisions of this producer cartel, which could extend or adjust current production reductions.
Brent crude futures rose 0.2% to $72.51 a barrel, while U.S. oil also rose 0.2% to $68.75. These increases come after a drop of almost 2% observed on Wednesday, due to persistent uncertainties about the direction of the market.
According to internal sources, OPEC+ would consider extending current production cuts to support oil prices in the face of still fragile demand. These restrictions could be maintained until at least March 2025.
A strategy in question: price or market share
Analysts remain divided on the intentions of OPEC+. According to Satoru Yoshida, analyst at Rakuten Securities, “the market is waiting to see whether OPEC+ will favor price support through prolonged reductions or defend its market shares by easing them.” This decision could significantly influence global market dynamics in the short term. Volatility is also fueled by geopolitical factors. Tensions in the Middle East, particularly between Israel and Hezbollah, continue to weigh on the market, adding a layer of uncertainty.
The drop in American stocks as a factor supporting the price of oil
Data from the Energy Information Administration (EIA) shows a larger-than-expected decline in U.S. crude inventories, providing temporary support for prices. This reduction results from an increase in refinery activity. On the other hand, stocks of gasoline and distillates increased, reflecting slowing domestic demand.
With global demand still fragile and geopolitical tensions lingering, decisions made by OPEC+ at this meeting will have a major impact on forecasts for 2025. Extending production cuts could offer price support, but the group will need to also balance this approach with competition in the global market. In conclusion, investors remain attentive to upcoming announcements, while the oil market continues to navigate a complex environment marked by economic and geopolitical uncertainties.
