Crude oil futures dipped in early Asian trading on December 3, pressured by a stronger US dollar, while easing inflation in South Korea fueled optimism that the country’s central bank may further reduce rates to stimulate demand.
At 11:25 AM Singapore time (0325 GMT), the ICE February Brent futures contract was down by 3 cents, or 0.04%, settling at $71.80 per barrel. Meanwhile, the NYMEX January light sweet crude contract fell 9 cents, or 0.13%, to $68.01 per barrel. The US Dollar Index stood at 106.540, up 0.11% from the previous close at 10:22 AM Singapore time (0222 GMT).
SPI Asset Management’s Managing Partner Stephen Innes noted that the dollar had regained strength after a subdued performance the previous week due to month-end rebalancing, bolstered by President-elect Trump’s firm stance on maintaining the dollar as the global reserve currency.
South Korea’s Inflation Eases
South Korea’s inflation slowed in November, with the Consumer Price Index (CPI) rising 1.5% year-on-year, up from 1.3% in October but lower than the market consensus of 1.7%. Analysts attributed the increase primarily to last year’s low base and noted that fresh food prices had stabilized sharply. This was somewhat offset by higher fuel prices due to reductions in fuel tax cuts. Core CPI also saw a slight rise to 1.9%, aligning with expectations.
ING’s Robert Carnell and Min Joo Kang stated that the subdued inflation outlook could prompt further rate cuts by the Bank of Korea to stimulate economic activity.
US Crude Stocks Expected to Fall
In the US, expectations that crude stocks would decline in the week ending November 29 helped support near-term prices. Analysts surveyed by S&P Global Commodity Insights predicted a drop of 1.6 million barrels to around 426.8 million barrels, marking a four-week low and 4.8% below the five-week average.
The American Petroleum Institute is expected to release more definitive figures later on December 3, with the US Energy Information Administration’s data due on December 4.
OPEC+ Faces Challenges at Upcoming Meeting
The December 5 OPEC+ meeting remains a focal point as the alliance grapples with whether to ease production cuts by 2025. OPEC+ is aiming to balance supply and demand while maintaining market share. Phillip Nova’s Senior Market Analyst Priyanka Sachdeva warned that the circulation of excess non-OPEC oil is limiting OPEC+’s options. She suggested that the group is likely to delay lifting production cuts until 2025, given the uncertain demand outlook.
Iraqi Crude Production Declines
Iraq’s crude production, excluding the semi-autonomous Kurdistan region, averaged 3.721 million barrels per day (b/d) in November, according to SOMO, the state marketer. This was a decrease of 61,000 b/d from October’s output of 3.782 million b/d. Despite this decline, Iraq faces pressure from OPEC+ members to meet its production quota and compensate for overproduction in 2024. Iraq’s OPEC+ quota, which includes production from the Kurdistan Regional Government (KRG), is 3.905 million b/d.
Dubai Crude Prices Lower
Dubai crude swaps and intermonth spreads also fell in midmorning trading on December 3. The February Dubai swap was pegged at $70.47 per barrel, down 66 cents, or 0.93%, from the December 2 close. The January-February intermonth spread dropped 3 cents to 42 cents per barrel, while the February-March spread declined by 2 cents to 24 cents per barrel. The February Brent-Dubai exchange of futures for swaps was pegged at $1.28 per barrel, down 10 cents.
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