CFDs on Brent Crude oil posted an intraday high of $78.37 and intraday low of $77.99. Oil is currently trading at $78.04 (11:16pm Tuesday, 05 December 2023 (GMT+5) Time in Pakistan).
CFDs on WTI Crude Oil posted an intraday high of $73.41 and intraday low of $73.05. Oil is currently trading at $73.08 (11:16pm Tuesday, 05 December 2023 (GMT+5) Time in Pakistan).
OPEC+ production cuts and a muted demand outlook were the main causes of Tuesday’s additional drop in global oil prices, which followed a recent trend. The market is keeping a close eye on developments within the OPEC+ alliance as both Brent and West Texas Intermediate (WTI) crude are currently experiencing their fourth consecutive decline.
Experts blame this downward trend on doubts about the viability of OPEC+ production plans. “The market has decided that (OPEC+) production plans are not going to have that much of an impact,” said Andrew Lipow, president of Lipow Oil Associates. Style is prioritised over substance, according to Reuters.
Prince Abdulaziz bin Salman, the energy minister of Saudi Arabia, expressed optimism about the outcome of the planned 2.2 million barrel per day production reductions.
Bin Salman expressed his sincere belief that the 2.2 will be delivered in a televised interview with Bloomberg, highlighting the alliance’s resolve to overcome obstacles, including possible inventory buildups in the first quarter.
Nevertheless, OPEC+’s voluntary production cuts have raised questions about how exactly they will be implemented and how to measure them. Mobius Risk Group Vice President of Markets and Research Zane Curry observed that traders have been in a “Show-Me state,” waiting to see if production cuts and predicted shifts in demand actually occur.
Worries were heightened by recent surveys showing weak global manufacturing activity in November, especially in the eurozone. The “deal” involving OPEC+ was deemed unconvincing by brokerage OANDA analyst Craig Erlam. He emphasised the market’s anticipation of a slowdown in the economy in 2019 and implied that the announced steps might not be sufficient.
Separately, Western countries stepped up efforts to enforce the $60 per barrel price cap on Russian oil shipments via sea. The dynamic global oil market becomes even more complex as a result of this action, which is intended to punish Moscow for its activities in Ukraine.
Oil prices are still being closely watched as the market awaits more definite indications of future trends while the industry struggles with the uncertainties surrounding OPEC+ and changing geopolitical dynamics.
The article was published with input from Reuters
