Crude oil futures traded marginally lower on Friday morning after OPEC+ delayed plans to increase production output by three more months.
At 9.54 am on Friday, February Brent oil futures were at $72.02, down by 0.10 per cent, and January crude oil futures on WTI (West Texas Intermediate) were at $68.28, down by 0.03 per cent.
December crude oil futures were trading at ₹5797 on Multi Commodity Exchange (MCX) during the initial hour of trading on Friday against the previous close of ₹5805, down by 0.14 per cent, and January futures were trading at ₹5787 against the previous close of ₹5798, down by 0.19 per cent.
OPEC+ (Organization of the Petroleum Exporting Countries, and allies) countries, which previously announced additional voluntary adjustments in April 2023 and November 2023, held a virtual meeting on the sideline of the 38th OPEC and non-OPEC Ministerial Meeting.
A media release said the group decided to extend the additional voluntary adjustments of 1.65 million barrels a day that were announced in April 2023, until the end of December 2026.
Moreover, OPEC+ countries will extend their additional voluntary adjustments of 2.2 million barrels a day that were announced in November 2023, until the end of March 2025 and then the 2.2 million barrels a day adjustment will be gradually phased out on a monthly basis until the end of September 2026 to support market stability, it said. This monthly increase can be paused or reversed subject to market conditions, the statement said.
The Commodities Daily feed by Warren Patterson, Head of Commodities Strategy of ING Think, said the action taken by OPEC+ eats quite heavily into the surplus that was expected over 2025. However, the extension and the slower return of barrels is not enough to push the market into deficit next year. The move still leaves the market in surplus in the first half of 2025, although admittedly the surplus is more manageable at around 500,000 barrels a day compared to 1 million barrels a day expected previously, he said.
“For the peak demand period of third quarter of 2025 we now see the market essentially in balance, before returning to a surplus of 1 million barrels a day in the final quarter of 2025,” he said.
While the action taken by OPEC+ may potentially provide a higher floor to the market than previously expected, ultimately the group will still have to accept lower prices. OPEC+ faces the ongoing issue of growing non-OPEC supply and disappointing demand growth, largely due to China.
Stating that expectations for global demand growth going into next year remain modest at less than 1 million barrels a day, he said while part of this demand slowdown is cyclical, there is also a large part which is structural due to the higher penetration rates of new energy vehicles.
On the price forecasts, Patterson said expectations for a smaller surplus means that downside for ICE Brent is likely more limited in 2025 than initially expected. “Previously, we had forecast ICE Brent to average $69 a barrel over 2025. However, following this action from OPEC+ we have increased this to $71 a barrel. The fact that the market will still be in surplus means that there is still downside in prices from current levels, particularly in the fourth quarter of 2025. Risks to this view include OPEC+ extending these cuts even further into 2025 and stricter enforcement of oil sanctions against Iran,” he said.
December copper futures were trading at ₹824.55 on MCX during the initial hour of trading on Friday against the previous close of ₹820.20, up by 0.53 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), December jeera contracts were trading at ₹23650 in the initial hour of trading on Friday against the previous close of ₹23800, down by 0.63 per cent.
December guarseed futures were trading at ₹5134 on NCDEX in the initial hour of trading on Friday against the previous close of ₹5143, down by 0.17 per cent.
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