After delaying the meeting to discuss output quota for a day, the OPEC+ still fails to reach a deal regarding production increase for the coming months. News headlines suggest that the increase could eventually be below market expectations. Crude oil prices jumped with the front-month WTI contract rose to near 3-year high of US$76.22/ bbl before pullback. Price settled at 75.04, up +2.1% for the day. The Brent contract also soared to 74.55, the highest since 2018 before settling at 75.61, up +0.64%.
Lower reduction in output cut would tighten the market, a scenario supportive of crude oil prices. Meanwhile, extension of the deal until the end of next year is another price driver, in particular amidst Iran uncertainty and global economic developments.
Talks will continue today, in hopes of reaching a final deal. Failure to reach an agreement would mean that the alliance would stick with current production – no further trim of output cut. This should send crude oil prices higher.