The global crude market is bracing for a crucial Opec+ ministerial meeting on November 30 amid forecasts by analysts that prices could fall further if the producers’ group might not make additional production cuts to offset growing supply from the United States and falling demand.

Oil prices tumbled more than 4.0 per cent last week after Opec+ said they would delay a meeting, originally scheduled for November 26 that was expected to discuss further cuts to global supply.

On Friday, traders cautiously awaited the outcome of the rescheduled meeting. Benchmark US crude oil for January delivery fell $1.56 to $75.54 per barrel on Friday, while rent crude for January delivery fell 84 cents to $80.23 per barrel.

The unexpected postponement of the meeting to Thursday, due to difficulties in reaching a consensus on production levels, initially caused the sharp decline in Brent and WTI prices. Reports citing Opec+ sources said that the meeting had been delayed due to a disagreement around the current production levels of some members and possible cuts associated with them.

Hedge fund manager Pierre Andurand said the Opec+ group may need to make additional cuts to offset growing supply from the US that has exceeded expectations. Due to higher output in the US and other non-Opec+ producers, the alliance may need deeper cuts to offset the higher-than-expected supply to the market, he said in a Bloomberg television interview.

US oil production has grown in 2023 by 700,000 to 800,000 barrels per day (bpd) more than expected, according to Andurand.

Goldman Sachs said the possibility of a deeper output cut is on the table when oil producers meet on November 30. The bank expects Saudi Arabia and Russia to announce an extension of their additional voluntary curbs through at least the first quarter of 2024.

“Our base case is that policymakers leave the voluntary group cut unchanged given near-average inventory levels and time-spreads, an already low Saudi market share, and Opec’s strong demand forecast,” Goldman said in a note.

Analysts pointed out that both Brent and WTI prices fell for four consecutive weeks, driven by record US crude oil production and worries about waning global demand, particularly in China, the world’s biggest oil importer. Brent is down 18 per cent since late September, while WTI has entered a bear market after falling 20 per cent since its peak that month.

Prices have declined despite a decision by the alliance in April to slash its total output by 1.66 million barrels per day until the end of the year, and additional voluntary cuts announced by Saudi Arabia and Russia in the months since.

A deeper Opec+ group cut combined with the Saudis and Russians rolling over their voluntary reduction would wipe out the currently expected market surplus in the first quarter of 2024, ING strategists Warren Patterson and Ewa Manthey wrote in a report.

However, Toril Bosoni, the head of Oil Industry and Markets Division at the International Energy Agency, said that the current oil market deficit could turn into a slight surplus in 2024 even if Opec+ leaders Saudi Arabia and Russia extend their cuts into 2024.

Recently, the IEA raised its global oil demand forecasts for 2023 and 2024, as consumption is exceeding expectations. But the agency warned that supply growth was also topping forecasts.

“For now, with demand still exceeding available supplies heading into the Northern Hemisphere winter, market balances will remain vulnerable to heightened economic and geopolitical risks — and further volatility ahead,” the IEA said last week.

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