Crude oil futures remained steady on Friday morning despite some members of OPEC+ (Organization of the Petroleum Exporting Countries and its allies) delaying the production output increase by two months.
At 9.56 am on Friday, November Brent oil futures were at $72.68, down by 0.01 per cent, and October crude oil futures on WTI (West Texas Intermediate) were at $69.14, down by 0.01 per cent.
September crude oil futures were trading at ₹5825 on Multi Commodity Exchange (MCX) during the initial hour of trading on Friday, up by 0.26 per cent from the previous close of ₹5810, and October futures were trading at ₹5799, up by 0.26 per cent from the previous close of ₹5784.
A media statement by OPEC+ said on Thursday that the OPEC+ countries, which previously announced additional voluntary cuts in April and November 2023, held a virtual meeting on September 5. During the meeting, the eight-member countries emphasized their collective resolve to fully comply with voluntary production adjustments. The countries included Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman.
Iraq and Kazakhstan have overproduced since January 2024 and have strongly reaffirmed their commitment to the agreement and their compensation schedules.
In recognition of this strengthened resolve and renewed firm commitment, the eight participating countries have agreed to extend their additional voluntary production cuts of 2.2 million barrels a day for two months until the end of November. After that, these cuts will be gradually phased out on a monthly basis starting December 1. The overproducing countries also reconfirmed their commitment that the entire overproduced volume will be fully compensated for by September 2025, the OPEC+ statement said.
In their Commodities Feed, ING Think’s Warren Patterson, Head of Commodities Strategy, and Ewa Manthey, Commodities Strategist, said it was no surprise, given the recent pressure on the oil market, that OPEC+ members decided to delay plans to phase out their additional voluntary cuts. Members were set to bring 180,000 barrels a day of supply onto the market in October and a similar amount in November. Instead, plans to increase supply have been pushed back by two months. Members are now scheduled to gradually bring back 2.2 million barrels a day from December 2024 through November 2025, they said.
“There could also be an element where OPEC+ is waiting for the outcome of the US election. A Trump victory could mean that the US takes a more hawkish view against Iran once again and so stricter enforcement of oil sanctions. This could potentially see as much as 1.3 million barrels a day of Iranian supply impacted, which would allow other OPEC+ members to unwind their additional voluntary cuts,” they said.
Meanwhile, a petroleum status report by the US EIA (Energy Information Administration) for the week ending August 30 showed a decline in crude oil inventories in the US.
US commercial crude oil inventories decreased by 6.9 million barrels for the week ending August 30 from the previous week. At 418.3 million barrels, US crude oil inventories were about 5 per cent below the five-year average for this time of year.
Total motor gasoline inventories increased by 0.8 million barrels from last week and were about 2 per cent below the five-year average for this time of year.
Total products supplied over the last four weeks averaged 20.8 million barrels a day, down by 1.6 per cent from last year. Over the past four weeks, motor gasoline product supplied averaged 9.1 million barrels daily, up by 0.9 per cent from last year.
September natural gas futures were trading at ₹190.40 on MCX during the initial hour of trading on Friday, down by 0.26 per cent from the previous close of ₹190.90.
On the National Commodities and Derivatives Exchange (NCDEX), September cottonseed oilcake contracts were trading at ₹3480 in the initial hour of trading on Friday against the previous close of ₹3493, down by 0.37 per cent.
September castor seed futures were trading at ₹6094 on NCDEX in the initial hour of Friday, down by 0.23 per cent from the previous close of ₹6108.