PortfolioCrude clings to US$40s, eyeing Fed lift-off, Opec let-down

November might as well have not happened for the oil markets.

Aside from NYMEX crude briefly slipping below the US$40/barrel mark on burgeoning US stockpiles, and some upticks towards the end of the month amid rising geopolitical tensions from the war against Islamic State, Brent and WTI were mostly locked in languid sideways movements through November.

Continuing oversupply and fears of eroding demand growth in the coming year kept a firm lid on prices, also limiting the geopolitical premium.

All eyes were turned toward a few major events in December: expectations of an interest rate hike at the US Federal Reserve meeting from December 15 to 16; Opec ministers meeting in Vienna on December 4 to agree to do nothing about the global supply glut; and the climate change talks in Paris from November 30 to December 11, which could have longer term implications for fossil fuels.

Venezuela, striving again to have its voice heard ahead of the Opec meeting, warned of oil dropping to the low US$20s/barrel if the producers’ group didn’t act. Oil minister Eulogio del Pino suggested Opec aim for US$88/barrel “equilibrium price”, which would imply a hefty – and equally unlikely – production cut.

Saudi oil minister and Opec kingpin Ali Naimi responded with platitudes about the kingdom’s willingness to “cooperate” with producers to “maintain market and price stability”, which failed to dent consensus expectations for Opec to stay the course.