Oil prices on Wednesday experienced another modest decline, this time due to concern over the Organization of Petroleum Exporting Countries (OPEC) delaying a meeting on production cuts that was scheduled for the weekend.
Analytical discourse was rife after the cartel said in a statement that the meeting of energy ministers is delayed until next Thursday and did not provide a reason – although delegates told media that Saudi Arabia is struggling to convince Angola and Nigeria to accept lower output targets.
The result was a tumultuous trading session ending with West Texas Intermediate settling down 67 cents at $77.10 per barrel, and Brent settling down 49 cents at $81.96 per barrel.
Fawad Razaqzada, analyst at City Index and FOREX.com, said, "The delay of the meeting has sent prices lower because it increases the risk of the Saudis removing their additional voluntary cuts to the tune of one million barrels per day that has been in place since July."
Rebecca Babin, a senior energy trader at CIBC Private Wealth, added that "The market lives in fear of a 2020 outcome" when OPEC failed to stem a price decline and oil temporarily went negative – even though those circumstances were fuelled by panicked governments around the world taking China's cue and imposing lockdowns due to Covid.
Demand concerns on Wednesday were exacerbated by the Energy Information Agency, which reported that crude production in the U.S. has reached a record 13.2 million barrels per day (bpd); also, domestic inventories increased by 8.7 million barrels for the week ending Nov. 17, while finished gasoline supplied declined by 469,000 barrels from the prior weak, an indication of softening demand.
The U.S. was hardly the only country to report escalating output: Venezuela's oil ministry stated that production had reached 850,000 bpd and that the production volume reached as of Wednesday is up from October's output of 786,000 bpd.
According to Forbes, oil traders have been "rushing" to buy Venezuelan crude since Washington temporarily eased sanctions on October 18.