Oil prices fell in Asian trading on Monday as markets remained unsure about further production cuts by OPEC+ after postponing this week’s meeting, while the expectation of a series of key economic readings also kept traders on edge.
Crude oil prices fell for the fifth consecutive week as hopes of further supply cuts by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) were largely dashed by the postponement of the meeting to Nov. 30 instead of Nov. 26, especially as reports suggested that the delay was caused by disagreements over planned production cuts.
Brent crude futures that expire in January fell 0.3% to $80.32 a barrel, while West Texas Intermediate crude futures that expire in January fell 0.4% to $75.26 a barrel. Both contracts closed slightly lower last week.
Saudi Arabia and Russia, two of OPEC+ producers, are largely expected to expand or deepen ongoing supply cuts. The two have led OPEC+ in curbing supply this year, amid growing concerns that higher interest rates and deteriorating economic conditions will weigh on global oil demand.
But production at other OPEC+ members has seen an increase in recent months. That some African countries plan to increase production at the next meeting, which is contrary to the plans of Saudi Arabia, the de facto OPEC+ leader.
Increased production by some OPEC+ members, coupled with record high US production and rising Chinese inventories, has made oil markets look less tight as initially thought this year. This trend is likely to lead to further production cuts from Saudi Arabia and Russia, which analysts expect to tighten supply until 2024.
Market Watch: The Impact of Economic Readings on Oil Prices and Global Demand Tensions
Oil markets have also been cautious ahead of a series of key economic readings this week, starting with eurozone inflation on Thursday. The bloc slipped into technical slump in the third quarter, raising concerns about slowing crude demand.
China’s PMI data is due on Thursday and is set to provide further signals about business activity in the world’s largest oil importer. Economic activity in the country has remained largely weak in recent months, which, along with rising oil inventories, could slow Chinese oil demand.
Also scheduled this week is a second reading of the US third-quarter GDP data, as well as the PCE prices – the Fed’s preferred inflation measure. Both readings are expected to show continued resilience in the US economy.
The price of oil, a catalyst for financial markets in the Gulf region, fell on Friday as some hostages were released in Gaza, lowering the geopolitical risk premium. Benchmark crude rose slightly last week, their first weekly gain in five weeks, buoyed by expectations that Saudi Arabia and Russia may extend voluntary supply cuts until early 2024, and OPEC+ may discuss plans for further cuts.
In Qatar, the index fell 0.7 percent, weighed down by a 1.5 percent drop in Qatar Islamic Bank and a 1.5 percent drop in Qatar Petrochemical Industries.
Outside the Gulf, Egypt’s main index fell 0.8 percent, with Commercial International Bank (CIB), Egypt’s largest bank, losing two percent. Saudi Arabia’s main index rose 0.1 percent, ending two sessions of losses, boosted by a 1.2 percent rise in Elm.
