Oil futures: Crudes regains Angola-led losses, Brent holds near $80/b

Quantum Commodity Intelligence – Crude oil futures in European trading hours Friday were edging higher as markets continued to claw back the $2/b losses recorded in the immediate wake of Angola's resignation from OPEC.

Front-month Feb24 ICE Brent futures were trading at $79.76/b (1405 GMT), compared to Thursday's settle of $79.39/b.

At the same time Feb24 NYMEX WTI was trading $74.55/b, versus Thursday's settle of $73.89/b.

Focus shifted back to broader geopolitical events, and in particular the crisis developing around the Red Sea, with more oil and LNG vessels rerouting and while not directly impacting energy supplies, it is causing delayed journey times and jamming up logistics.

Houthi militants said they will not be deterred by the US-led multinational taskforce formed to safeguard commercial shipping along the key waterway, while Germany's Hapag-Lloyd and Hong Kong's OOCL have become the latest operators to avoid the Red Sea.

Commodities markets also received a boost this week after the Dollar Index retreated to five-month lows of below 102 points on growing speculation the US Federal Reserve will start to ease interest rates in the first half of next year.

Both benchmarks were heading for the largest weekly gain since early October, also moving up for a second week, having previously registered seven consecutive falls. Last Friday, Feb24 Brent closed at $76.55/b, while Feb24 WTI settled at $71.78/b.

Angola

Angola announced Thursday it was leaving the producer coalition, saying that its membership in OPEC did not serve the country's interests, with the West African producer disgruntled over what it sees as measly quotas and baseline output levels.

"On the surface Angola leaving OPEC is not that big of a deal because they can barely pump their oil quota. Today the concern is that Angola's departure might signal some underlying tension with the fact that the cartel is losing market share to non-OPEC producers and mainly the United States," said Phil Flynn of The Price Futures Group.

Angola's updated quota of 1.11 million bpd is slightly below the 1.08 million bpd of production in November, but the country has plans to boost output in the coming year and is disgruntled its ambitions could be thwarted by OPEC membership.

"Because the decision was not taken unanimously and was against Angola's position, during the meeting we reiterated our proposal for a quota of 1,180,000 barrels of crude oil per day for 2024 and afterwards a note of protest was sent to the OPEC Secretariat," Angola's oil minister Diamantino Azevedo said in a statement.

But the resignation is still a blow for OPEC, which along with OPEC+ partners, has presented a strong show of solidarity since the 2020 pandemic.