Crude oil prices flat as markets weigh OPEC cuts

Oil prices remain flat after slumping four-month low last week

Crude oil prices remained flat on November 22, after slumping nearly to a four-month low last week, as cautious traders look for more cuts from the Organisation of Petroleum Exporting Countries (OPEC) amidst concerns of oversupply and faltering demand.

OPEC and its allies, commonly known as OPEC+, are scheduled to meet on November 26 when the oil cartel might extend or deepen supply cuts to support crude prices.

Benchmark Brent crude was trading at $82.31 per barrel on November 22. It closed at $82.45 per barrel the previous day.

Concerns of a slowdown in demand loom as China, which is the largest energy consumer in the world, reels with a build-up in fuel stocks, with little recovery in its travel sector. This comes as the International Energy Agency (IEA) expects a surplus in supply in 2024.

The global oil market will see a slight surplus of supply next year, even if OPEC+ nations extend their cuts into next year, the head of the IEA’s oil markets and industry division told Reuters on November 21.

Meanwhile, traders are also monitoring the potential impact from the Gulf of Mexico oil spill. Earlier this week, the US Coast Guard said that an estimated 1.1 million gallons of crude oil has leaked into the Gulf of Mexico near a pipeline off the coast of Louisiana.

Last month, crude oil prices had jumped by about 5 percent, soon after Hamas launched a surprise large-scale attack on Israel on October 7 on worries that Gulf supplies could be affected. However, prices dropped as the conflict did not directly impact oil supplies.

State-owned oil marketing companies (OMCs) stand to benefit from the slip in oil prices with shares of the refiners witnessing a double-digit gain earlier this week.  Commenting on crude oil price volatility, Geojit Financial said in a report, "If unable to constantly trade above $78, there are potential downsides. Otherwise, it may continue upticks."

Eyes on supply cuts

OPEC and its allies, commonly known as OPEC+, are scheduled to meet on November 26 in which the oil cartel might extend or deepen supply cuts to support crude prices.

OPEC members Saudi Arabia and Russia have already pledged output cuts of  5.16 million barrels per day in response to the falling oil prices and demand concerns.