Oil prices are sliding this morning (after yesterday’s gains) as traders anxiously await tomorrow’s high-stakes OPEC+ meeting (supply), and weighed signs that the Fed is done raising interest rates (demand).
“The anxiety brewing in the crude market heading into tomorrow’s meeting is palpable,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth.
“Positioning suggests that trades fear the downside more than the fear of missing out on a rally.”
The producer group is expected to set policy for 2024 but has yet to resolve a dispute over output quotas for some African members, according to delegates.API reported overnight that crude inventories declined (and so did Cushing stocks) for the first time in six weeks.API
DOE
The official data opposed API’s with Crude and Cushing stocks building (and Gasoline stocks also rising vs API’s draw). Distillates saw a huge 5.2mm inventory build too… 
Source: BloombergThe Biden admin took advantage of low oil prices and refilled the SPR with 313k barrels. That is the first ‘build’ at the SPR in 7 weeks… 
Source: BloombergStockpiles at Cushing rose to their highest since August… 
Source: BloombergUS crude production continues to hover at record highs of 13.2mm b/d (ignoring the trend lower in rig count)… 
Source: BloombergWTI was hovering around $76 ahead of the official data and extended losses after the across-the-board builds… 
Finally, the weak market is pressuring Saudi Arabia, the de facto leader of OPEC Plus, to push to continue and perhaps even deepen production cuts.
“There is a good chance the group will agree to some sort of additional cuts,” said Richard Bronze, head of geopolitics at Energy Aspects, a research firm.
But, as Gary Ross, chief executive of Black Gold Investors, pointed out:
“We are getting not far from the point where quotas are becoming unrealistically low.”
Operators outside OPEC generally have an interest in producing oil rapidly to recoup their investments and earn profits.
“The pipeline of non-OPEC projects alone appears sufficient to meet all global demand growth in the next few years at least,” analysts at Morgan Stanley wrote in a recent research note.
Of course, events could scramble forecasts. The picture would look very different if the now-suspended fighting in Gaza spread to the wider Middle East, which has some of the world’s largest producers around the Persian Gulf along with sea lanes that carry their oil to customers.More By This Author:Q3 GDP Revised Higher To 5.2% As Soaring Government Spending Offsets Lower Private Consumption
WTI Holds Gains After API Reports First Crude Draw In 6 Weeks
Refill Of Strategic Petroleum Reserve Slowed By Companies Delaying Return Of Borrowed Barrels
