November 10 – Oil prices experienced a boost on Friday, yet they are poised for a third consecutive weekly decline due to signs of slowing demand. The market’s focus has shifted to a crucial meeting of OPEC and its allies later this month, where decisions on production levels will be made.
Brent crude futures for January saw an increase of 1.2%, reaching $81 per barrel at 1451 GMT. Concurrently, U.S. West Texas Intermediate (WTI) crude futures for December rose by 1.2% to $76.67. However, both contracts are expected to witness a 5% decline for the week.
“Concerns about demand have replaced the fear of production outages related to the Middle East conflict,” noted Commerzbank.
Worries over diminishing demand were exacerbated by weak Chinese economic data this week. Refiners in China, the largest buyer of crude oil from Saudi Arabia, have requested reduced supply for December.
The upcoming meeting of the Organization of the Petroleum Exporting Countries and allies (OPEC+) on November 26 will play a pivotal role in determining the group’s production policy. All eyes are on whether Saudi Arabia will extend its voluntary 1 million barrel-per-day cut, set to expire at the end of the year.
RBC Capital Markets analyst Helima Croft expressed the view that the likelihood of Saudi Arabia extending its unilateral cut into the first quarter of 2024 is increasing, given renewed concerns about Chinese demand and the broader economic outlook.
Citi analysts, in a note on Thursday, anticipated a relief from downward pressure and a subsequent recovery in prices after this week’s dip to the lowest levels since July. They expect prices to consolidate, citing support from easing refinery maintenance and a shift in the risk-reward for investors following the recent sell-off.
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