More than 2% decline in oil prices is caused by investors' skepticism about OPEC+ measures.
More than 2% decline in oil prices is caused by investors' skepticism about OPEC+ measures.
December 1, New York (Reuters) - Due to market doubts regarding the extent of OPEC+ production cutbacks and worries about the slowdown in global manufacturing, oil prices fell by more than 2% on Friday.
At $78.88 a barrel, Brent crude futures for February ended the day down $1.98, or 2.45%.
West Texas Intermediate (WTI) oil futures for the United States fell $1.89, or 2.49%, to $74.07 per barrel.
Brent saw a weekly loss of roughly 2.1%, while WTI saw a loss of more than 1.9%.
On Thursday, members of OPEC+ reached a decision to withdraw almost 2.2 million barrels per day (bpd) of oil from the world market in the first quarter of 2019. This amount includes the rollover of Saudi Arabia's and Russia's present voluntary cuts of 1.3 million bpd.
The announcement was met with some suspicion by traders, according to Craig Erlam, analyst at OANDA.
"(It) seems traders either aren't buying that members will be compliant or don't view it as being sufficient," Erlam stated.
Over 40% of the world's oil supply is supplied by OPEC+, which is cutting back on production as a result of worries about how slow economic development will affect the demand for fuel. In late September, prices dropped from roughly $98 per barrel.
The reductions "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," John Evans, a PVM analyst, said.
There was no collective modification of OPEC+ output objectives because the cuts that were agreed upon by the group on Thursday are optional. Because the reduction were voluntary, there was significant doubt about whether producers would actually apply them to the fullest extent and about the metrics used to gauge their effectiveness.
Friday, Federal Reserve Chair Jerome Powell stated that the bank will "carefully" adjust interest rates in the US as the risks of "under- and over-tightening are becoming balanced."
According to a poll, factory employment declined in November and U.S. manufacturing remained muted.
Investors are keeping a tight eye on global industrial activity, which remained weak during the month on lackluster demand, polls showed.
The conflict in Gaza resumed on Friday as negotiations to prolong a week-long ceasefire between Israel and the militant Palestinian organization Hamas broke down. Because of the initial fear that any escalation involving adjacent oil producers could disrupt supply, the conflict had supported oil prices. Global oil flows have not been significantly impacted by the conflict thus far.
Regarding supplies, the United States targeted three organizations and three oil vessels with new penalties on Friday in connection with the price cap on Russian oil.
This week, there were 505 oil rigs in the United States, the most since September, according to a highly watched report released on Friday by energy services company Baker Hughes (BKR.O).
Speaking at the two-week COP28 meeting in the United Arab Emirates, U.N. Secretary General Antonio Guterres on Friday advocated for a future in which there is no combustion of fossil fuels at all.
According to data released on Friday by the U.S. Commodity Futures Trading Commission (CFTC), money managers reduced their net long positions in U.S. crude futures and options during the weekending November 28 by 7,663 contracts, to 62,070.
Source reuters.com
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