Oil prices rise after storm disrupts Kazakh, Russian exports

An oil and gas industry worker walks during operations of a drilling rig at Zhetybay field in the Mangystau region, Kazakhstan, Nov 13, 2023. REUTERS/Turar Kazangapov/File photo

TOKYO  – Oil prices rose on Wednesday as a storm in the Black Sea region disrupted oil exports from Kazakhstan and Russia, raising fears of supply tightness, while investors awaited a crucial decision by OPEC+, which may deepen or extend output cuts.

Brent crude futures gained 33 cents, or 0.4 percent, at $82.01 a barrel at 0127 GMT. U.S. West Texas Intermediate (WTI) crude futures climbed 45 cents, or 0.6 percent, to $76.86 a barrel.

Both benchmarks gained about 2 percent on Tuesday on the possibility the Organization of the Petroleum Exporting Countries and allies such as Russia (OPEC+), will extend or deepen supply cuts, as well as concerns over Kazakh oil output and a weaker U.S. dollar.

A severe storm in the Black Sea region has disrupted up to 2 million barrels per day (bpd) of oil exports from Kazakhtsan and Russia, according to state’s officials and port agent data.

Kazakhstan’s largest oilfields are cutting combined daily oil output by 56 percent from Nov. 27, the Kazakh energy ministry said.

“Investors covered short positions ahead of OPEC+ meeting amid worries over supply disruption from Kazakhstan,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.

“All eyes are on OPEC+ policy and demand outlook toward the end of this year, but WTI is expected to hover around $76, with a range of $5 each above and below, for a while unless OPEC+ significantly expands production cuts,” he said.

OPEC+ is due to hold an online ministerial meeting on Thursday to discuss 2024 production targets, after delaying the meeting from Nov. 26.

The talks will be difficult and a rollover of the previous agreement is possible rather than deeper production cuts, four OPEC+ sources said.

Oil also found support from the dollar’s weakness and a drop in U.S. crude inventories.

The dollar languished near a three-month trough against its major peers on Wednesday as expectations mount the Federal Reserve could begin lowering rates by early next year.

A weaker dollar typically supports oil prices as it makes oil cheaper for those holding other currencies.

Meanwhile, U.S. crude oil inventories fell by 817,000 barrels last week, according to market sources citing American Petroleum Institute figures.

Eight analysts polled by Reuters estimated on average that crude inventories fell by about 900,000 barrels in the week to Nov. 24. Weekly U.S. government data on stockpiles is due on Wednesday.