Gas prices may decline further as oil plunges 4% amid OPEC meeting postponement
Global oil prices plunge over 4% as OPEC postpones crucial meeting to discuss potential supply cuts, leading to a possible decrease in gas prices
Oil prices plummeted over 4% on Wednesday following the announcement that a meeting of major oil-producing nations, originally set for Sunday, was being postponed. The meeting was anticipated to address additional reductions to global supply. The global benchmark, Brent crude, and the US benchmark, West Texas Intermediate (WTI) crude, both dropped by over 4% in late morning trading. Brent crude was down 3.7% to $79 per barrel, while WTI crude fell 3.8% to $75 per barrel by 11:49 a.m. ET.
US drivers filling up at the pump over the Thanksgiving holiday weekend could see even better news with the drop in gas prices. According to AAA, the average price for a gallon of regular gas is currently $3.28, which is nearly 8% lower than a month ago and 10% below last year's price.
OPEC+ announced the postponement of its ministerial meeting until November 30 without giving a reason for the delay.
According to OPEC+ sources cited by Reuters, the meeting was delayed due to disagreements over the current production levels of certain members and potential cuts. Earlier on Wednesday, Bloomberg reported that Saudi officials were dissatisfied with the output levels of some OPEC members. "The fact that the (oil) price dropped as a result of this suggests traders fear that there may not be complete agreement on the extent of output cuts heading into next year," noted Craig Erlam, a senior market analyst at OANDA.
Both the Brent and WTI prices have dropped for four weeks in a row, driven by the record production of crude oil in the United States and concerns about weakening global demand, particularly in China, the largest oil importer in the world. Brent has decreased by 18% since late September, while WTI has entered a bear market after falling by 20% from its peak in that month.
Despite OPEC+'s commitment in April to reduce its total output by 1.66 million barrels per day until the end of the year, and the additional voluntary cuts announced by Saudi Arabia and Russia in the following months, prices have continued to decline.
In a note on Wednesday, Jorge León, senior vice-president at Rystad Energy, expressed uncertainty about the possibility of a deadlock among OPEC+ countries in reaching a further agreement on cuts. He highlighted that while ministerial meetings had been delayed before, the current four-day delay was unprecedented. Additionally, León pointed out the potential challenges for certain OPEC+ members, such as Russia and Nigeria, in agreeing to reduce production targets.
Rystad still expects OPEC+ to reach an agreement at the meeting on November 30, but the process will likely be "challenging," he added.
