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Oil down more than 1 per cent as uncertainty swirls over delayed OPEC+ meeting

oil
Crude oil pump jack.

Oil prices fell by more than 1 per cent on Thursday, extending losses from the previous session, after OPEC+ postponed a ministerial meeting, leading to speculation that producers might cut output less than earlier anticipated.

Brent futures were down $1.02, or 1.2 per cent, at $80.94 a barrel by 0625 GMT, after falling as much as 4 per cent on Wednesday. US West Texas Intermediate crude dipped 87 cents, or 1.1 per cent, to $76.23, after declining as much as 5 per cent in the previous session.

Trade was expected to remain muted due to the Thanksgiving holiday in the United States.

In a surprise move, the Organization of the Petroleum Exporting Countries and allies including Russia delayed to Nov. 30 a ministerial meeting where they were expected to discuss oil output cuts.

Producers were struggling to agree on output levels and hence possible reductions ahead of the meeting originally set for Nov. 26, OPEC+ sources said.

Three OPEC+ sources, however, said this was linked to African countries, which are smaller producers in the group, which somewhat eased investor concerns.

Analysts said that Angola, Congo and Nigeria were seeking to raise their 2024 supply quotas above the provisional levels agreed at the OPEC+ June meeting.

“At that meeting, OPEC squared the books on increasing UAE’s quota… by reducing the targets for the African nations that were underperforming their required production numbers,” said Helima Croft, an analyst at RBC Capital Markets, in a client note.

Angola and Congo have been producing below their 2024 production targets, whilst Nigeria has been able to increase output above target due to the improving security situation in the oil-rich Niger Delta.

“We think Nigeria can be assuaged as the leadership values its longstanding OPEC membership and improving ties with Saudi Arabia… However, it may be more difficult to bridge the gap with Angola which has been a moodier member of the producer group since it joined in 2007,” said RBC’s Croft.

“Disagreement between members will likely increase volatility within the market over the course of the next week,” analysts at ING Bank said in a note.

The questions over OPEC+ supply come as data showed US crude stocks jumped by 8.7 million barrels last week, which was much more than the 1.16 million build that analysts had expected.

US oil rigs remained unchanged at 500 in the week to Nov. 22, energy services firm Baker Hughes (BKR.O) said in its closely followed report on Wednesday.

Meanwhile, about 3 per cent of crude oil production in the Gulf of Mexico, or around 61,165 barrels of daily output, was shut in by an underwater pipeline leak, the US Coast Guard said on Wednesday.

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