Oil Holds Drop as OPEC+ Decision on Supply Takes the Spotlight

(Bloomberg) -- Oil steadied after a decline, with traders looking ahead to an OPEC+ meeting on Thursday that’s expected to see the cartel again defer a move to revive output in an already well-supplied market.

Brent crude traded above $72 a barrel after sliding by nearly 2% on Wednesday, with West Texas Intermediate below $69. The Organization of the Petroleum Exporting Countries and its allies are edging closer to agreeing to push back an increase in supply to stave off a glut in 2025.

US data on Wednesday was mixed. While commercial stockpiles shrank more than 5 million barrels for the biggest weekly drop since August, nationwide oil production hit a record in a reminder of robust output from nations outside the cartel. At present, US rigs pump more than 13.5 million barrels a day, compared with about 9 million in OPEC+ de facto leader Saudi Arabia.

Crude has been caught in a tight range since mid-October, with volatility ebbing. Prices have been influenced by competing drivers including signs of softer Chinese demand and the prospect of a second Donald Trump presidency, which may see support for domestic oil production but tighter sanctions against flows from Iran and Venezuela. 

“It has become somewhat clear that OPEC+’s hands are tied, and with a potential increase in oil production from a Trump Administration coming 2025, their aim to prop up prices may be more challenging,” said Yeap Jun Rong, market strategist at IG Asia Pte in Singapore. The worst case for prices may be OPEC+ throwing in the towel by choosing not to extend its cuts, he said.

Iran’s representative to OPEC+ said late last month the group had little scope to reverse the output curbs, which have triggered a wave of supply from the US. The comments — which were unusually critical for one of the group’s founding members — were later removed.

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