New Telegraph

Oil Prices Stabilise After Underwhelming OPEC+ Cuts

Following a 2% drop on Thursday, November 30, the market is unconvinced that the latest round of OPEC+ production cuts will be able to lift prices out of their recent slump as oil prices stabilise on Friday.

Brent crude futures for February rose by 16 cents, or 0.2%, to $81.02 a barrel by 1520 GMT on their first day as the front-month contract.

U.S. West Texas Intermediate crude futures (WTI) rose 25 cents, or 0.33%, to $76.21.

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.

OPEC+, which pumps over 40% of the world’s oil, is focusing on reducing output as prices have fallen from about $98 in late September amid concerns over weaker economic growth in 2024.

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The market received the news with scepticism and confusion, driven by concerns about compliance given the voluntary nature of the reductions, ongoing macroeconomic headwinds, and investors’ prior expectations of deeper cuts.

“Markets may have been pricing in another larger cut, and it just didn’t meet those expectations,” OANDA analyst Craig Erlam said.

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.

“The only real hope for long-term balance in the market is for a dramatic improvement in global economic data as we start the new year,” Onyx Capital Group CEO Greg Newman said.

U.S. manufacturing contracted for the 13th consecutive month in November with a PMI score of 46.7, missing economists’ forecast of 47.6. Factory data remained weak across the globe in November poor demand, surveys showed.

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