Crude oil prices experienced a slight dip during mid-morning trade in Asia, as the market anxiously awaited the OPEC+ ministerial meeting where officials would discuss production policy. Most analysts anticipated no changes to the current approach of price control, with a few speculating that Saudi Arabia might start rolling back voluntary production cuts. However, it is unlikely that the group will alter its output policy, according to Warren Patterson, commodities strategist at ING. Despite this, Saudi Arabia could possibly begin easing its additional voluntary supply cut of 1 million barrels per day.
The latest job data from the United States indicated a tight labor market, prompting concerns about potential interest rate hikes by the Federal Reserve. As a result, oil prices faced pressure, with West Texas Intermediate dropping below $89 per barrel and Brent trading below $91. Reuters quoted IG analyst Yeap Jun Rong, who stated that a strong labor market would give the Federal Reserve more room to maintain high interest rates. Warren Patterson from ING suggested that the downward movement in oil prices was driven by rising Treasury yields and the stronger US dollar, rather than fundamental factors. He believed that, fundamentally, oil had the potential to move higher.
In addition to these factors, the flow of oil from Kurdistan to the Black Sea was temporarily halted, causing further downward pressure on prices. However, negotiations on the pipeline’s restart terms were still ongoing between Turkey and Iraq. Meanwhile, Russia announced that it would not establish an end date for its previously implemented fuel export ban, which aimed to address a domestic market shortage.
