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Oil falls over 2% after OPEC+ cuts fall short of expectations

Published Nov 29, 2023 08:59PM ET Updated Nov 30, 2023 03:40PM ET
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© Reuters. An aerial view shows a crude oil tanker at an oil terminal off Waidiao island in Zhoushan, Zhejiang province, China January 4, 2023. China Daily via REUTERS/File Photo
 
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By Laura Sanicola

(Reuters) -Oil prices fell by more than 2% on Thursday after OPEC+ producers agreed to voluntary oil output cuts for the first quarter next year that fell short of market expectations.

Brent crude futures for January settled 27 cents, or 0.3%, lower to expire at $82.83 a barrel, and a 5.2% loss for the month. The February contract, which begins trading as the front month on Friday, fell $2.00, or 2.4%, to $80.86.

U.S. West Texas Intermediate crude futures settled down $1.90, or 2.4%, to $75.96, and down 6.2% in November.

Saudi Arabia, Russia and other members of OPEC+, who pump more than 40% of the world's oil, agreed to voluntary output cuts approaching 2 million barrels per day (bpd) for the first quarter of 2024.

At least 1.3 million bpd of those cuts, however, were an extension of voluntary curbs that Saudi Arabia and Russia already had in place. Earlier, delegates had said new additional cuts under discussion were as much as 2 million bpd.

"For now, the outcome does not live up to the expectation... in recent days," said Callum MacPherson, head of commodities at Investec.

The voluntary nature of the cuts left investors nonplussed.

"From what we’ve seen so far, this looks like a paper cut of around 600-700,000 barrels per day (bpd) vs Q4 2023 planned levels," said James Davis at FGE.

"It could at best be an actual cut of around 500,000 bpd compared to Q4. This might be just enough to keep the market balanced in Q1, but it will be close."

Saudi Arabia, Russia, Kuwait, Kazakhstan and Algeria were among producers who said cuts would be unwound gradually after the first quarter, market conditions permitting.

The meeting, being held on the same day as global leaders gather in Dubai for the U.N. climate conference, was originally scheduled for last week but was deferred because of disagreements over output quotas for African producers.

OPEC+ also invited Brazil, a top 10 oil producer, to become a member of the group. The country's energy minister said it hoped to join in January.

Meanwhile crude output in the U.S., the world's top producer, continued to grow, rising 1.7% in September to a monthly record of 13.24 million bpd, the Energy Information Administration said.

Crude production in Texas fell by 0.1% to 5.57 million bpd, the lowest since July and the first time production in the state has fallen since April, the EIA said.

Oil falls over 2% after OPEC+ cuts fall short of expectations
 

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Comments (4)
John Smith
John Smith Nov 30, 2023 2:30PM ET
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The market has turned into a scam.
John Smith
John Smith Nov 30, 2023 2:20PM ET
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People can study this bs all they want it is mostly manipulation. Everyone needs to get out
Red Eagle
Red Eagle Nov 30, 2023 2:20PM ET
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lol
Dima Yush
Dima Yush Nov 30, 2023 1:19PM ET
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are you skeptical about SPR depletion and inability to refill?
Casador Del Oso
Casador Del Oso Nov 30, 2023 12:11PM ET
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Crude prices fall on announcements of production cuts? A whopper of a recession must be coming our way.
Egidijus Tuleikis
Egidijus Tuleikis Nov 30, 2023 12:11PM ET
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so what do you say, bpd cuts and price will climb up ?
Jacobo Sánchez Torres
Jacobo Sánchez Torres Nov 30, 2023 12:11PM ET
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Egidijus Tuleikis   supply and demand, as simple as that
Ondrej nepovim
Ondrej nepovim Nov 30, 2023 12:11PM ET
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it is getting cold. in China.
Damian Waluta
Damian Waluta Nov 30, 2023 12:11PM ET
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I'm not sure, copper running, but Oil specu.ation like yesterday after crude stock. i belive if 70$ below WTI
 
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