OPEC+ set to end standoff with African oil producers on 2024 supply levels

LONDON: OPEC+ has moved closer to a compromise with African oil producers on 2024 output levels, four OPEC+ sources told Reuters, after disagreements over those targets forced the group of oil-producing nations to postpone a key meeting.

OPEC members Angola and Nigeria were aiming for a higher oil output allowance, officials told Reuters. The postponement of the meeting of Organization of the Petroleum Exporting Countries and allies such as Russia, known as OPEC+, from Nov. 26 to Nov. 30 sent oil prices sharply lower. But they have since recovered, with Brent crude prices on Friday trading above $81 a barrel.

On Thursday OPEC said the meeting would be held virtually. One of the sources, who spoke on condition of anonymity, said he felt "with 99 percent of confidence" that OPEC+ could reach an agreement on Nov. 30.

A second source said that an "understanding has been reached" over the African producers issue. Two other sources said that an agreement was near. Nigeria's governor to OPEC Gabriel Tanimu Aduda told Reuters on Thursday that he was not aware of any disagreements with other members of OPEC+ over his country's production targets.

Nigeria and Angola were among several countries given lower targets at the last OPEC+ meeting in June after years of failing to meet the previous ones. As of October, Angola was pumping less than its quota for 2024, according assessments by independent sources cited by OPEC.

Nigeria is pumping close to its 2024 quota of 1.38 million bpd but less than a 2024 level of 1.58 million bpd being considered for it subject to independent assessments. Several analysts have said they expect OPEC+ to extend or even deepen oil supply cuts into next year in order to support prices.

The market is also waiting to see if Saudi Arabia extends its additional 1 million bpd voluntary production cut, which is due to expire at the end of December. Meanwhile, global benchmark Brent crude oil hovered above $81 a barrel on Friday ahead of next week's OPEC+ meeting, which could bring some kind of agreement on production cuts in 2024.

Brent crude futures were up 52 cents at $81.94 a barrel by 11:35 1635 GMT, having settled 0.7 percent down in the previous session. U.S. West Texas Intermediate crude were down 31 cents from Wednesday's close, dropping to $76.81. There was no settlement for WTI on Thursday owing to the U.S. Thanksgiving holiday.

Both contracts were on track for their first weekly gain in five weeks as OPEC+ prepares for a meeting that will have output cuts high on the agenda after recent oil price declines on demand concerns and burgeoning supply, particularly from non-OPEC producers.

The surprise delay had initially brought Brent futures down as much as 4 percent and WTI by as much as 5 percent in intraday trading on Wednesday. Trading remained subdued during Thursday's U.S. holiday.

"While I wouldn't be entirely surprised to see leaks or comments over the weekend that still have an impact on the oil price on the open next week, the actual meeting now occurring Thursday could put traders' minds somewhat at ease," said Craig Erlam, senior market analyst at OANDA.

A bright spot came in the form of the near-term economic outlook in China. Recent Chinese data and fresh aid to the indebted property sector can be "positive for the oil market's near-term trend", said CMC Markets analyst Tina Teng.

Yet those gains could be capped by higher U.S. crude stockpiles and poor refining margins, leading to weaker demand from U.S. refineries, analysts said. "Fundamentals developments have been bearish with rising U.S. oil inventories," ANZ analysts said in a note.

Still, China's longer-term outlook remains lukewarm. Analysts say oil demand growth could weaken to about 4% in the first half of 2024 as the property sector crunch weighs on diesel use.