Oil prices tumbled more than 4% Wednesday after a group of the biggest oil producing nations said they would delay a meeting, originally scheduled for Sunday, that was expected to discuss making further cuts to global supply.
Brent crude, the global benchmark, and West Texas Intermediate (WTI) crude, the US benchmark, both fell over 4% late morning ET. Brent traded down 3.7% to $79 a barrel, and WTI down 3.8% to $75 a barrel, by 11.49 a.m. ET.
The drops could bring more good news for US drivers filling up at the pump over the Thanksgiving holiday weekend. The average price of a gallon of regular gas currently stands at $3.28, according to the AAA, down nearly 8% in a month and 10% below where it was this time last year.
The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, said in a statement that it would postpone its ministerial meeting till November 30, without providing a reason.
Reuters reported, citing OPEC+ sources, that the meeting had been delayed due to a disagreement around the current production levels of some members and possible cuts associated with them. Likewise, earlier on Wednesday, Bloomberg reported that Saudi officials were unhappy with some OPEC members’ levels of output.
“That the (oil) price plunged on the back of this suggests traders believe there may not be full agreement on the scale of output cuts going into next year,” Craig Erlam, a senior market analyst at OANDA, wrote in a note.
Both Brent and WTI prices have fallen for four consecutive weeks, pressured by record crude oil production in the United States and worries about waning global demand, particularly in China, the world’s biggest oil importer. Brent is down 18% since late September, while WTI has entered a bear market after falling 20% since its peak that month.
Prices have declined despite a pledge by OPEC+ in April to slash its total output by 1.66 million barrels per day until the end of the year, and additional voluntary cuts announced by Saudi Arabia and Russia in the months since.
Jorge León, senior vice-president at Rystad Energy, wrote in a note Wednesday that he could not “completely rule out the possibility of a deadlock at this point” between OPEC+ countries trying to agree further cuts.
León noted that such ministerial meetings had been postponed before “but never for four days,” adding that it would be difficult for several OPEC+ members, including Russia and Nigeria, to accept lower 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.
