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Oil Prices Remain Depressed After OPEC+ Shocked Markets

Crude oil prices remained depressed in morning trade today in Asia following the Wednesday slump.

Yesterday’s drop in prices was caused by news that OPEC+ is delaying its meeting, originally scheduled for this Sunday, to next Thursday. The latest EIA oil inventory report then added to downward pressure on oil prices by showing a sizeable build in U.S. crude stocks.

Brent crude and West Texas Intermediate shed more than 1% earlier today, with Reuters reporting that there appeared to be disagreement among OPEC members on the production levels the cartel was aiming for.

Citing unnamed sources from the cartel, the report said the dispute focused on African members. Analysts have suggested that Angola, Nigeria, and Congo want to have their production quotas raised from the levels agreed at a meeting in June.

In June, OPEC+ agreed to limit output, with Saudi Arabia voluntarily cutting production by 1 million bpd and then extending this commitment until the end of this year. Since then, Saudi Arabia has expressed dissatisfaction with the production levels of other OPEC members.

“At that meeting, OPEC squared the books on increasing UAE’s quota… by reducing the targets for the African nations that were underperforming their required production numbers,” RBC Capital Markets’ Helima Croft said in a note, cited by Reuters.

ING’s Warren Patterson noted that disagreement among OPEC members would heighten price volatility but it remains unclear whether this disagreement would affect the cartel’s policy or Saudi Arabia’s production plans, Bloomberg reported earlier today.

Citigroup analysts said they did not expect any surprises from the OPEC meeting, with Saudi Arabia most likely to extend its voluntary cuts of 1 million bpd for another month. The rest of OPEC would probably stick to their current quotas, the analysts predicted.

Fears that OPEC+ will further deepen cuts at its next meeting put downward pressure on oil prices earlier this week, but the postponement of the meeting has added further concerns over the intensifying spat among the cartel’s members.

Ahead of the delayed meeting, most analysts had expected the Saudis to extend the voluntary production cuts into 2024.

By Irina Slav for

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