Crude prices saw a small dip today after 10:00 am GMT after the media reported that OPEC decided to cancel the joint technical committee (JTC) meeting. Meetings of JTC usually precedes OPEC ministerial meetings and prepares recommendations for ministerial meetings. Cancellation of JTC meeting strongly hints that no decision to change policy or output levels will be made at the next OPEC+ meeting on Sunday, December 4. On top of that, it should be noted that the upcoming meeting will be held online, which is another hint that no big announcement will be made.
This suggests that OPEC wants to wait and see how the situation with looming restrictions on Russian oil, which are set to go live on December 5, 2022, develops. However, it should be said that there are reasons for the cartel to further tighten oil supply. Oil futures curve has recently moved into contango, meaning that near-dated contracts are priced at discount to long-dated contracts. This hints at weak near-term demand and could be used as justification for further output cuts.
Taking a look at WTI chart (OIL.WTI) at D1 interval, we can see that crude prices bounced off an almost 1-year low, reached at the beginning of this week. While a lack of output cut from OPEC+ could see some stabilization on the oil market, it should be noted that with economic contraction in sight and weakening demand, it seems to be just a matter of time until the cartel decides to lower production further.
Source: xStation5
