International crude oil ended its three consecutive declines, and on November 28th, crude oil futures prices rebounded. The settlement price of the main WTI crude oil futures contract in the United States was $76.41/barrel, with an increase of $1.55 or 2.1%. The settlement price of Brent crude oil futures main contract was $81.47/barrel, an increase of 1.60 US dollars or 2.0%. The main reason is that the market expects the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to extend and deepen production cuts, as well as the potential risk of a decline in US crude oil inventories.
The OPEC+ meeting, originally scheduled for last Sunday, has been postponed to the 30th of this month. Prior to the meeting, the market was generally influenced by its policy trends. The latest news shows that OPEC+ has the possibility of extending and deepening production cuts, mainly due to the organization's concerns about weak global crude oil demand and member countries' demands for high oil prices.
However, at the same time, member countries are not completely unified, and deepening production reduction involves quota issues for specific member countries, making it difficult to reach consensus at the meeting. OPEC sources stated that this was due to differences in the production levels of African oil producing countries. At that time, OPEC announced the postponement of the meeting to resolve the differences in production targets among African oil producing countries. At present, the member states of the organization have reached a compromise. The market's assessment of the policy is that Saudi Arabia will continue to implement additional production cuts, and the voluntary policy of reducing production by 1 million barrels per day may be extended until the second/third quarter of 2024. This serves as a support for the oil market.
According to data released by the American Petroleum Institute (API) on Tuesday, US crude oil and gasoline inventories decreased last week, with a decrease of 817,000 barrels in US crude oil inventories for the week ending November 24th. Gasoline inventories decreased by nearly 900,000 barrels, while distillate inventories increased by 2.8 million barrels. The average expectation of the eight analysts interviewed earlier is that as of the week ending November 24th, US crude oil inventories will decline by approximately 900,000 barrels. On Wednesday, the US Energy Information Agency (EIA) will release inventory data, and the market generally expects a greater possibility of a decrease in crude oil inventories.
The latest news is that the daily production of Kazakhstan's largest oilfield has decreased by over 50%. The Ministry of Energy of the country stated that several major oil fields will continue their production reduction plans until December 3rd, with the aim of aligning with OPEC's production targets. The Ministry of Energy of the country currently predicts oil production (excluding condensate gas) to be 1.588 million barrels per day in November and 1.673 million barrels per day in December, which is lower than the previously planned 1.605 million barrels per day and 1.599 million barrels per day, but still higher than the quota of 1.55 million barrels per day. The short-term decline in the country's oil production will affect the destination countries transported through the Black Sea.
SunSirs crude oil analysts believe that on a macro level, the recent weakening of the US dollar may provide support for oil prices. From the perspective of supply and demand, oil prices tend to fluctuate within a range on the eve of the OPEC+ meeting, mainly due to news disturbances. Future supply expectations depend on the formulation and implementation of OPEC+ production policies, and tight supply expectations can hedge against the risk of declining demand. The future supply-demand game will intensify, and there is a high probability that oil prices will widen.
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