Speculation that Saudi-led alliance will make further production cuts
Oil prices fell as a dispute within OPEC+ forced the group to postpone its upcoming meeting, and as US data showed a large increase in stockpiles, dampening speculation that the Saudi-led alliance would make further production cuts.
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Global benchmark Brent fell below $81 a barrel following a volatile session on Wednesday in which prices dropped more than $4, while US crude was near $76. OPEC+ postponed the meeting to the end of the month due to emerging disagreements over quotas for African members, including Angola. Trading is likely to be thin on Thursday due to the Thanksgiving holiday in the US.
According to Energy Information Administration data, nationwide crude stockpiles in the US rose by 8.7 million barrels last week, marking the fifth consecutive increase and coming in well above estimates to reach its highest level since July. Stockpiles at the key Cushing, Oklahoma oil storage hub also expanded.
Crude oil has been shaken in recent weeks by signs of rising non-OPEC production, fueling speculation that the Organization of the Petroleum Exporting Countries and its allies will decide to extend or possibly deepen production cuts. Amid signs of abundant supply, Europe is struggling with a supply glut due to a combination of lackluster demand and cargo flows from the US.
Warren Patterson, head of commodities strategy at ING in Singapore, said, "The disagreement between members will likely increase volatility in the market." However, he noted that it is unclear how this will affect broader policy or whether it will have any impact on Saudi Arabia.