Oil Edges Lower on Letdown After Expected OPEC+ Production Delay
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(Bloomberg) -- Oil inched lower in a choppy session after OPEC+ deferred supply increases for three months, but still plans to add barrels next year to a market that’s expected to be oversupplied.
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West Texas Intermediate shed 0.4% to settle near $68 a barrel after flipping between gains and losses for much of the session. Brent retreated to settle near $72. The Organization of the Petroleum Exporting Countries and its allies agreed to delay their planned output hike, a move that will see supplies returned from April 2025 until September 2026.
“A delay won’t cut it,” Daniel Ghali, a commodity strategist at TD Commodities, wrote in a note. While the producer group’s plan will keep a floor under prices in the near term, “the drag from energy supply risk premia will persist nonetheless.”
Crude has been caught in a tight range since mid-October, with volatility ebbing. Prices have been influenced by competing drivers including signs of softer Chinese demand and the prospect of a second Donald Trump presidency, which may see support for domestic oil production but tighter sanctions against flows from Iran and Venezuela.
The OPEC+ delay comes against the backdrop of a market that the International Energy Agency says will be oversupplied next year. Underscoring the challenges the producer group faces, seaborne oil flows globally soared in November, and data on Wednesday showed US crude production hit a record above 13.5 million barrels a day while US shipments of refined fuel overseas reached the second-highest evYer.
“OPEC+ is most certainly still in the ‘protect price’ mode,” said Ole Hansen, head of commodities strategy at Saxo Bank. “Hopefully by March they and us will be wiser regarding the impact of Trump’s policies and China’s potential stimulus response and also whether Iran’s output has suffered from additional sanctions.”
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--With assistance from Alex Longley.
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