Oil extends losses as US stockpiles expand before OPEC+ meet

Oil fell for a third day after US crude stockpiles rose and progress was made on Iranian nuclear talks before an OPEC+ meeting.

Futures in New York slid below $80 a barrel after losing almost 4 per cent over the past two sessions. American crude inventories climbed for the fifth time in six weeks, according to government figures, while the US and Iran agreed to resume talks later this month on reviving a nuclear deal.

OPEC+ is meeting later on Thursday and the alliance is expected to stick with its planned gradual output hike for December, despite calls from consumers to pump more.

Oil recently rallied to the highest since 2014 as an economic rebound from the pandemic combined with an energy crunch to drive up demand for crude. US President Joe Biden has led calls from major consumers for OPEC+ to increase output to cool elevated prices, but Saudi Arabia and others in the alliance have pushed back, citing risks from ongoing virus outbreaks.

OPEC+ is set to ratify a monthly increase of 400,000 barrels a day, continuing the gradual revival of production halted during the pandemic, according to a Bloomberg survey. While that’s been a consistent target for the alliance, some members – particularly Angola and Nigeria – have struggled to boost output.

“Prices are likely to remain choppy as speculation gains on OPEC+’s next move,” said Will Sungchil Yun, senior commodities analyst at VI Investment Corp. “If OPEC+ decides to push forward with a 400,000-barrels-a-day increase as per initial expectations, then prices will be boosted once again.”

Nationwide US crude inventories increased by 3.29 million barrels last week, according to the Energy Information Administration. That’s more than the median forecast in a Bloomberg survey. Gasoline inventories slid by 1.49 million barrels, while distillate supplies rose, the EIA said.

Crude stockpiles at Cushing, Oklahoma, fell for a fourth week to 26.4 million barrels. Shrinking inventories at the key storage hub – the delivery point for WTI futures – have sent gauges of market health, known as timespreads, soaring to the most bullish levels in years.

The US and Iran will resume talks November 29 on reviving the agreement that imposed limits on Tehran’s nuclear programme, with discussions taking place through European and Russian intermediaries, rather than face-to-face. It’s the first indication that President Ebrahim Raisi’s government is willing to test the waters with the US over easing sanctions to bring Iran’s oil back to market.