Oil stabilises after slump on OPEC+ cuts

Crude benchmarks on track to post weekly gains

NEWYORK:

Oil prices were stable on Friday following a 2% drop the prior day, as the market kept a wary eye on the latest OPEC+ production cuts.

Brent crude futures for February rose by 32 cents, or 0.4%, to $81.18 a barrel by 1746 GMT on their first day as the front-month contract. US West Texas Intermediate crude futures (WTI) rose 33 cents, or 0.43%, to $76.29.

Both benchmarks were on track to post weekly gains, with WTI set to rise about 1.3% and Brent 1%.

Read: Crude edges up ahead of OPEC+ meet

OPEC+ producers agreed on Thursday to remove around 2.2 million barrels per day (bpd) of oil from the global market in the first quarter of next year, with the total including a rollover of Saudi Arabia and Russia’s 1.3 million bpd of current voluntary cuts. Traders viewed the announcement with some skepticism, Oanda analyst Craig Erlam said.

“(It) seems traders either aren’t buying that members will be compliant or don’t view it as being sufficient,” he said. OPEC+ is focusing on reducing output as prices have fallen from about $98 in late September amid concerns over weaker economic growth in 2024.

The cuts “will not stop a billowing cloud of confusion that is going to take the oil market weeks and months to figure out and only if the self-reporting data is indeed reliable,” PVM analyst John Evans said.

Published in The Express Tribune, December 2^nd, 2023.

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