On Wednesday (December 4), international oil prices dropped nearly 2%, relinquishing most of the gains driven by previous optimistic forecasts. As the OPEC+ meeting approaches, market funds have taken a wait-and-see attitude, awaiting the final decision. Despite the U.S. Energy Information Administration (EIA) showing a surprising drop in crude oil inventories, the data diverges significantly from the American Petroleum Institute (API), causing market sentiment to remain cautious. Following the announcement, oil prices initially spiked but then declined, with funds opting not to pursue further gains.
Market Sentiment Turns Cautious, Weak Demand
The domestic oil product market performed strongly in November, but last week saw the gasoline and diesel crack spreads in European and American markets retreat, indicating ongoing weak demand. Against the backdrop of global economic downturn pressure, the oil market's reliance on supply policies has significantly increased. The market expects that OPEC+ might undertake a new round of production cuts to maintain price stability, depending on whether member countries can reach a consensus.
Saudi Arabia and Russia, as core members of OPEC+, have been committed to maintaining market balance through coordinated production cuts. However, countries like the UAE, which have a stronger desire to increase production, and some members with ineffective production cut implementations, complicate reaching an agreement. The final decision will be revealed later today, with the OPEC+ meeting scheduled to take place in Vienna at 12:30 PM on December 5 (7:30 PM Beijing Time).
OPEC+ Meeting May Lead to Significant Oil Price Fluctuations
Market analysts point out that different meeting resolutions could greatly affect oil price trends. If OPEC+ opts for further production cuts, prices may rise rapidly, but failing to reach a specific action plan may lead to significant price drops due to pessimistic sentiment. For investors, the current market environment holds high risks, and cautious participation is advised, with close attention to the progress of the OPEC+ meeting.
Supply Policies in Focus
The key variable in the current oil market is whether OPEC+ can form a unified supply policy. Historically, Saudi Arabia and Russia have tended to maintain market stability, but internal coordination challenges cannot be ignored. In particular, facing the challenge of weak global demand, the oil market requires more supply-side adjustments to counteract the pressures brought by economic uncertainty.
Regardless of the meeting outcome, oil prices may experience significant fluctuations in the short term, and investors need to be mindful of risk control and adjust strategies as needed. As the meeting resolutions are unveiled, the future direction of the oil market will gradually become clearer.
