Tuesday, November 29, 2022

Crude Oil Drifts Lower on Profit-Taking Ahead of OPEC+ Meeting By Investing.com


© Reuters.

By Geoffrey Smith 

Investing.com — Crude oil prices drifted lower to end the week but were still holding on to the bulk of their gains after a vigorous rally driven by the hopes for a rebound in global demand next year. 

By 11:25 AM ET (1625 GMT), futures were down 0.5% at $45.50 a barrel, while the international benchmark  was up 0.8% at $48.17. Brent reacted more to newswire reports suggesting that the so-called OPEC+ group of producers will agree to push back its planned production increase from January 1 by at least a couple of months when minister meet next week to review the market situation.

Reuters reported Friday OPEC+ will hold informal online talks on Saturday prior to next week’s key meetings.

The group has come under pressure to maintain the current level of oil production, given sluggish oil demand and fallout from the coronavirus pandemic. OPEC+ had previously agreed to increase output by 1.9 million barrels a day in January as part of a steady easing of record supply cuts as oil prices rose.

However, the decision to extend current production levels is by no means certain as a number of countries within the cartel are seeking to maximize. revenue by increasing production levels. With prices having rebounded sharply in the last two weeks as one biotech company after another has put out encouraging statements about the efficacy of their Covid-19 drugs, many members may now feel incentivized to cheat on their quotas.

In addition, OPEC+ will have to accommodate rising volumes of Libyan exports, which are expected to top 1.3 million barrels a day by the end of the year, and a possible increase in Iranian exports next year if the U.S. chooses a path of rapprochement under the new administration of President-elect Joe Biden.  Biden is expected by many to return to the UN-backed deal under which Iran agreed to stop enriching uranium five years ago. 

Iran’s nuclear program was in the spotlight again on Friday after one of its top scientists was killed in an armed attack that the Iranian government blamed on Israel’s secret service, Mossad. 

“Unfortunately, the medical team did not succeed in reviving him, and a few minutes ago, this manager and scientist achieved the high status of martyrdom after years of effort and struggle,” Reuters quoted a statement by Iran’s armed forces as saying. The source of the statement is illuminating, given that Iran has always claimed its nuclear program is for civilian purposes only.

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