Oil prices stabilize, pending the OPEC+ meeting

Oil prices remained stable on Wednesday, falling slightly after a report showing a jump in production in the United States, but ultimately supported by the prospect of maintaining production quotas from the OPEC+ cartel.

A barrel of Brent from the North Sea for delivery in January gained 0.03% to 72.83 dollars. Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery the same month, fell by 0.07% to $68.72.

«Prices remained virtually unchanged (…) as the market expects OPEC+ (Organization of the Petroleum Exporting Countries and their allies) to delay the reestablishment of its voluntary production reductions», commented to theAFP Andy Lipow, de Lipow Oil Associates.

Renewal of production cuts… or not

At the beginning of November, several OPEC+ members announced an extension of crude production cuts until the end of December, thus postponing the reopening of the floodgates. Faced with an expected increase in supply by 2025, analysts expect that the eight countries, including Saudi Arabia and Russia, will be forced to once again postpone their reintroduction into the 2 .2 million barrels per day at the end of the cartel's biannual meeting, initially scheduled for Sunday December 1, but which will finally take place on Thursday 5 of the same month.

The International Energy Agency (IEA) forecasts a growth in global demand of one million barrels of crude per day, but an increase in production of one and a half million barrels per day for producers alone non-OPEC+ members, mainly the United States, Canada, Brazil and Guyana.

Rebound in American production

In contrast, the weekly report from the US Energy Information Administration (EIA) published on Wednesday was “less favorable than expected (…) which contributed to weighing on (prices)“, observed John Kilduff of Again Capital. The drop in US crude stocks was more marked than expected, with reserves falling by 1.8 million barrels, while analysts were expecting a drop of only one million.

In theory, this decline is likely to support prices, but the report also showed a jump in American production to 13.49 million barrels (compared to 13.2 the previous week), close to its record (13.5 ). Enough to worry operators who fear too abundant supply next year, faced with less dynamic demand than expected.