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Oil settles slightly higher, investors still wary

Published Dec 10, 2023 08:38PM ET Updated Dec 11, 2023 03:36PM ET
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© Reuters. FILE PHOTO: Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in the Patagonian province of Neuquen, Argentina, January 21, 2019. REUTERS/Agustin Marcarian/File Photo
 
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By Laura Sanicola

(Reuters) -Oil prices settled up slightly on Monday as OPEC+ production cuts failed to fully offset worries around crude oversupply and softer fuel demand growth next year.

Brent crude futures settled up 19 cents, or 0.3%, to $76.03 a barrel while U.S. West Texas Intermediate crude futures settled up 9 cents, or 0.1%, at $71.32.

Both contracts jumped more than 2% on Friday but were down for a seventh straight week, their longest streak of weekly declines since 2018, on lingering oversupply concerns.

"There is little doubt that the oil complex remains in a state of vulnerability," oil broker PVM's John Evans said in a note on Monday.

Despite a pledge by the OPEC+ group, which comprises the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, to cut 2.2 million barrels per day (bpd) of crude oil production in the first quarter, investors remain sceptical about compliance.

"Members participating in the output curtailments are not only seeing reduced revenue from smaller volumes but also from the price plunge that developed subsequent to the last OPEC+ decision," said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.

Output growth in non-OPEC countries is expected to lead to excess supply next year.

RBC Capital Markets expects stock draws of 700,000 bpd in the first half, but only 140,000 bpd for the full year.

"Prices will remain volatile and directionless until the market sees clear data points pertaining to the voluntary output cuts," RBC analysts said in a note.

With cuts not implemented until next month, oil faces a volatile two months before clarity from any quantifiable compliance data, the analysts said.

The latest consumer price index data from China, the world's biggest oil importer, showed rising deflationary pressures as weak domestic demand cast doubt over the country's economic recovery.

Chinese officials on Friday pledged to spur domestic demand and consolidate and enhance the economic recovery in 2024.

This week, investors are watching for guidance on interest rate policies from meetings at five central banks, including the U.S. Federal Reserve, as well as U.S. inflation data to assess the potential impact on the global economy and oil demand.

Recent price weakness drew demand from the United States, which has sought up to 3 million barrels of crude for the Strategic Petroleum Reserve (SPR) in March 2024.

"We know the Biden Administration is in the market looking to refill the SPR, which will provide support," IG analyst Tony Sycamore said in a note, adding that prices were also being supported by technical chart indicators.

Meanwhile, a draft of a potential climate deal at the COP28 summit on Monday suggested a range of options countries could take to reduce greenhouse gas emissions, but omitted the "phase out" of fossil fuels many nations have demanded.

U.N. Secretary General Antonio Guterres said a central benchmark of success for COP28 would be whether it yielded a deal to phase out coal, oil and gas use fast enough to avert disastrous climate change.

Oil settles slightly higher, investors still wary
 

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Comments (6)
Rimon Mia
Rimon Mia Dec 11, 2023 9:01AM ET
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Maximus Maximus
Maximus Maximus Dec 11, 2023 3:45AM ET
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selling high and buying low is so woke...
First Last
First Last Dec 10, 2023 11:27PM ET
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Sell high, buy low into the SPR for US taxpayers.  Biden is a better trader than most here.  Go Bidenonmics!
Johnnie Sea
Johnnie Sea Dec 10, 2023 11:08PM ET
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Last  Tuesday, I covered all my short positions and went heavy into long positions. I really should have waited an extra day, but I am hedging my bets to the long side because I believe Brent will test the $80.00 level a few times and remain there for until Spring time.
Shep De
Shep De Dec 10, 2023 9:36PM ET
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pretty flat
Ge K
Ge K Dec 10, 2023 8:55PM ET
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Lets go Brandon
Maximus Maximus
Maximus Maximus Dec 10, 2023 8:55PM ET
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of course, for the cultists, ignorant of basic economics and most everything else, selling high and buying low is a bad idea...
Tre Hsi
Tre Hsi Dec 10, 2023 8:55PM ET
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Maximus Maximus  none of the MAGA nutjobs want to face the fact that currently US oil production level is at historical high....so much for Biden's war on oil??!!??
NK Dole
NK Dole Dec 10, 2023 8:55PM ET
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Tre Hsi  The record production has nothing to do with Biden.  The majority of gains in production in the US is in the Permian Basin region of Texas private lands.  Nothing to do with the Fed.  There is infrastructure there to handle it and more has been approved by the state.  Put this into another area such as PA or Ohio, and you wouldn't be seeing it.  I have a small project in NY and have been trying to get a stream crossing for 18 months for gas pipeline that barely makes a popcorn fart of gas.  It has all the necessary engineering reports and environmental reports, they just let it sit.  If we were dependent on the Fed to approve US oil and gas projects, we'd be in record decline, just like the SPR is at a record low.  It is pretty appalling to say the leaset that the emergency stock was used for purposes it was never intended for.
 
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