OIL FUTURES: Crude up with OPEC+ expected to delay production hike again

Crude oil futures were higher in mid-afternoon Asian trade Dec. 4 as market analysts expect OPEC+ to announce a delay in production hikes in its upcoming meeting.

At 4:10 pm Singapore time (0810 GMT), the ICE February Brent futures contract was up 16 cents/b (0.22%) from the previous close at $73.78/b, while the NYMEX January light sweet crude contract was up 11 cents/b (0.16%) from the previous close at $70.05/b.

Brent crude oil futures recovered from a two-week low ahead of the upcoming Organization of the Petroleum Exporting Countries (OPEC+) meeting scheduled for Dec. 5, an analyst said.

"Last week's high at $73.31/b would need to be exceeded, for the October to December downtrend line at $73.76/b to be reached. Together with the 55-day simple moving average at $73.97/b it may short-term cap, though. If not, the $74.95-$76.16/b resistance zone may be reached. Below Monday's $71.49/b low lies the key technical support at $69.91-$70.64/b, the October to November lows," IG's Market Analyst, Axel Rudolph said.

Following South Korea President Yoon Suk Yeol's declaration of martial law late Dec. 3 and its rapid cessation, the South Korean equities market took a slight hit. Further impact on crude oil futures remains to be seen.

"Markets will prefer a quick resolution to the stand-off and for political stability to return, but for now, it seems that the uncertainty over his leadership may continue to drag on for some time," IG Market Strategist Yeap Jun Rong said.

"Nevertheless, with [Yoon Suk Yeol's] low public rating and inability for any policy pass-through, we may see some calm gradually return if more clarity were to be presented. Of course, this is dependent on whether there will be any peaceful stand-down, or the worst case for markets will be any further escalation which may amplify the hit to economic sentiments," Yeap added.

In the West, the market is on the lookout for further economic data release from the US.

The number of US job openings increased by 372,000 to 7.744 million in October 2024, above market expectations of 7.480 million, and above September's 7.372 million, latest data form the US Bureau of Labor Statistics showed.

"US data will become more relevant as we move towards the payrolls report on Friday, but we get to digest other labor market indicators in the run-up for added flavor. On Tuesday, rates nudged back up on the back of slightly better [Job Openings and Labor Turnover Survey] data with the 10Y yield just above 4.20%," Benjamin Schroeder, senior rates strategist, and Padharaic Garvey, CFA, regional head of research, Americas, from ING said.

Still, analysts maintain that these readings, including the upcoming November ADP National Employment report and non-manufacturing ISM services data, add noise rather than clarity to the direction that December's Federal Reserve interest rate cuts may take.

Market analysts then point to dovish comments from the Federal Open Market Committee, with a cut in December still being a possibility, and that the neutral rate ought to be nearer to 3%.

"This comes after we heard Waller leaning for a December cut on Monday. The main focus for the market will be any comment from Fed Chair Powell when he speaks at the New York Times Dealbook summit," ING's Schroeder and Garvey added.

Dubai crude

Dubai crude swaps and intermonth spreads were higher in mid-afternoon Asian trading Dec. 4 from the previous close.

The February Dubai swap was pegged at $72.48/b at 2.00 pm Singapore time (0600 GMT), up by $1.35/b (1.90%) from the previous Asian market close.

The January-February Dubai swap intermonth spread was pegged at 45 cents/b, 1 cent/b wider over the same period, and the February-March Dubai swap intermonth spread was pegged at 28 cents/b, 2 cents/b wider over the same period.

The February Brent-Dubai exchange of futures for swaps was pegged at $1.37/b, 11 cents/b wider over the same period.