By Adedapo Adesanya
Oil prices fell on Friday as the release of some hostages in Gaza reduced the geopolitical risk premium and indicated that the Israel-Hamas tensions may not have much effect on the oil market.
Brent crude futures depreciated by 84 cents or 1 per cent at $80.58 a barrel, while the US West Texas Intermediate (WTI) crude dropped $1.56 or 2 per cent to close at $75.54. There was no settlement for WTI on Thursday owing to the US Thanksgiving holiday.
Prices notched their first week of gains in over a month ahead of next week’s meeting of the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ to decide on production cuts in 2024.
When OPEC+ gathers on November 30, many analysts predicted that the expanded cartel would extend existing 1 million barrels per day cuts into 2024 with others predicting that there would be additional curbs on top of this for all cartel members, and others predicting that this could be limited to just Saudi Arabia and Russia.
The survey comes as OPEC+ wrangles internally over output cuts, with African nations Angola, Nigeria, and Congo not keen to see their targets reduced despite their diminishing capacity.
In June, these three African OPEC producers were forced to accept lower output quotes for next year, and the upcoming meeting was expected to make them commit to additional cuts, with Saudi Arabia expressing discontent over the fact that it shoulders the bulk of the market-tightening burden.
On Friday, the first group of hostages freed from captivity in Gaza returned to Israel as part of a wider truce during which further exchanges of hostages for Palestinian detainees are due to take place.
Israel’s army has allowed eight trucks of fuel and cooking gas to enter the Gaza Strip from Egypt, the army’s liaison office with Palestinians, the Coordination of Government Activities in the Territories (COGAT), said on Friday.
Four tankers of fuel and another four tankers carrying cooking gas were transferred from Egypt to UN humanitarian aid organizations in the southern Gaza Strip via the Rafah Crossing from Egypt, COGAT said.
“The fuel and cooking gas are designated for operating essential humanitarian infrastructure in Gaza,” it said in a post on X, formerly known as Twitter.
Analysts say China’s oil demand growth could weaken to about 4 per cent in the first half of 2024 as the property sector crunch weighs on diesel use as the world’s largest oil importer’s longer-term outlook remains lukewarm.
Non-OPEC production growth is set to remain strong, with Brazilian state energy company Petrobras planning to invest $102 billion over the next five years to boost output to 3.2 million barrels of oil equivalent per day by 2028, up from 2.8 million barrels of oil equivalent per day in 2024.
Modupe Gbadeyanka