Oil prices steadied as trading thinned ahead of the U.S. Thanksgiving holiday, with eyes on an OPEC+ meeting scheduled for Sunday.
Brent crude, the global benchmark, held near $73 a barrel after rising just two cents on Wednesday, while West Texas Intermediate crude held below $69. OPEC+ is widely expected to again delay raising output at its meeting, in a bid to address concerns about a surplus expected next year.
Oil has been stuck in a narrow range, with the gap between supply and demand narrowing, since mid-October, amid price volatility due to geopolitical risks in the Middle East and Ukraine, Donald Trump’s election victory and expectations of a surplus in 2025. Trading in the United States was quiet ahead of the holiday, with just over 500,000 contracts of West Texas Intermediate crude changing hands on Wednesday, about 40% below the year-to-date average.
“The crude oil market may have already seen a slight delay in OPEC+ tapering its output cuts,” said Vandana Hari, founder of Vanda Insights in Singapore. “A decision to go ahead with the boost from Jan. 1, or anything as drastic as an indefinite delay, would come as a surprise to the markets.”
Meanwhile, U.S. crude inventories fell by 1.8 million barrels last week, ending a three-week streak of increases, according to data from the Energy Information Administration.
The spread between the two nearest futures contracts for Brent crude, a key indicator of futures prices, also improved markedly, with the spread between the nearest two futures contracts reaching 54 cents a barrel in backwardation, when the near-term contract trades at a higher price than the longer-term contract. This spread was 29 cents at the start of last week.
