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Oil prices fall more than 2% as investors skeptical of OPEC+ cuts

Published Nov 30, 2023 08:39PM ET Updated Dec 01, 2023 06:05PM ET
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© Reuters. FILE PHOTO: An aerial view shows oil tanks of Transneft oil pipeline operator at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia June 13, 2022. REUTERS/Tatiana Meel/File Photo
 
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By Nicole Jao

NEW YORK (Reuters) -Oil prices slumped more than 2% on Friday on investor skepticism about the depth of OPEC+ supply cuts and concern about sluggish global manufacturing activity.

Brent crude futures for February settled down $1.98, or 2.45%, at $78.88 a barrel.

U.S. West Texas Intermediate crude futures (WTI) dropped $1.89, or 2.49%, to $74.07 a barrel.

For the week, Brent posted a decline of about 2.1%, while WTI lost more than 1.9%.

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," Erlam added.

OPEC+, which pumps more than 40% of the world's oil, is reducing output after prices fell from about $98 a barrel in late September on concerns about the impact of sluggish economic growth on fuel demand.

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 cuts agreed by OPEC+ on Thursday are voluntary, so there was no collective revision of OPEC+ production targets. The voluntary nature of the cuts led to some skepticism about whether or not producers would fully implement them, and also from what basis the cuts would be measured.

In the United States, Federal Reserve Chair Jerome Powell said on Friday that the central bank would move "carefully" on interest rates as risks of "under- and over-tightening are becoming balanced."

U.S. manufacturing remained subdued and factory employment fell in November, according to a survey.

Investors are keeping a watchful eye on global manufacturing activity, which remained weak during the month on poor demand, surveys showed.

On Friday, talks to extend a week-long truce between Israel and Palestinian militant group Hamas collapsed, prompting a resumption in the war in Gaza. The conflict had initially supported oil prices on concern that any escalation that involved surrounding oil producers could disrupt supply. So far, the conflict has had no significant impact on global oil flows.

On the supply side, the United States on Friday imposed additional sanctions related to the price cap on Russian oil, targeting three entities and three oil tankers.

U.S. oil rigs rose five to 505 this week, their highest since September, energy services firm Baker Hughes said in its closely followed report on Friday. [RIG/U]

Meanwhile, U.N. Secretary General Antonio Guterres on Friday called for a future with no fossil fuel burning at all while speaking at the two-week COP28 summit in the UAE.

Money managers cut their net long U.S. crude futures and options positions in the week to Nov. 28 by 7,663 contracts to 62,070, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Oil prices fall more than 2% as investors skeptical of OPEC+ cuts
 

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Comments (13)
Tyrone Jackson
Tyrone Jackson Dec 01, 2023 8:24PM ET
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Most likely smart traders smell a recession or consumers with no money left to just drive around. Oil down.
Evan Williams
Evan Williams Dec 01, 2023 6:24PM ET
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Billy Bob in Texas is snatching up his kids and wifey, and heading out to the  Big Texan Steak Ranch in Amarillo, Billy is going to down that 72 oz. challenge steak... or not. Doesn't matter, because tomorrow he'll be out in his backyard, barreling up 200 barrels @ $74 / barrel, thanks to the Robed Thug Cartel. Billy Bob thanks the Thugs for the steak dinner, and his $10Million+ bank account. God Bless the Cartel.
NK Dole
NK Dole Dec 01, 2023 6:24PM ET
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What is wrong with you folks? Good grief smh.
Eight Ball
Eight Ball Dec 01, 2023 6:00PM ET
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Billy Bob in Texas is snatching up his kids and wifey, and heading out to the  Big Texan Steak Ranch in Amarillo, Billy is going to down that 72 oz. challenge steak... or not. Doesn't matter, because tomorrow he'll be out in his backyard, barreling up 200 barrels @ $74 / barrel, thanks to the Robed Thug Cartel. Billy Bob thanks the Thugs for the steak dinner, and his $10Million+ bank account. God Bless the Cartel.
Brad Albright
Brad Albright Dec 01, 2023 4:46PM ET
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Anybody seen Warm Camp?
John Smith
John Smith Dec 01, 2023 3:57PM ET
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What investors🤣. I like how they use that term alot. Investors keeping a watchful eye…. As if they all sit in the same room with the same idea…. Fakest shit on the planet is the stock market.
mark Pedzinski
mark Pedzinski Dec 01, 2023 2:12PM ET
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r u smoking some green tea?
Jerry Smith
Jerry Smith Dec 01, 2023 7:50AM ET
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75 coming
Poriya Dharmendra
Poriya Dharmendra Dec 01, 2023 7:50AM ET
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kiven Geldon
kiven Geldon Dec 01, 2023 7:30AM ET
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Helps expose the carbon scamdemic for what it is.
Midnight Trader
Midnight Trader Dec 01, 2023 7:30AM ET
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Science denier
Midnight Trader
Midnight Trader Dec 01, 2023 7:30AM ET
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And you probably believe in sky fairies.. sad. Beam me up Scotty, no intelligent life here
Omar Alzamil
Omar Alzamil Dec 01, 2023 6:50AM ET
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Saudis wanted the oil price hit 90$ but usa wanted down to 50$
Barry Nickerson
Subbuilder Dec 01, 2023 6:50AM ET
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Oil drilling companies want high oil prices, we, (the consumers), not just USA, want oil prices down.
Barry Nickerson
Subbuilder Dec 01, 2023 6:27AM ET
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I'll consider oil prices to have fallen when they go back down to the $40's and $50's like they were three years ago.
Royce Murph
Royce Murph Dec 01, 2023 6:27AM ET
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wont for a long time if even due to the trillions of dollars the US printed.  Inflation is your cultrate. Operating costs to sky high
 
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