Oil prices in 6th weekly side as bears sharpen claws after OPEC+ cuts fall short
Investing.com — Oil prices fell for a sixth-straight week Friday, as voluntary output cut agreements from major oil producers that fell short expectations continued to keep worries about oversupply front and centre.
By 14:30 ET (19.30 GMT), the U.S. crude futures settled 2.5% lower at $74.07 a barrel, and the Brent contract dropped 2.5% to $78.88 a barrel.
Both benchmarks fell around 2% on Thursday, resulting in losses over the course of November of over 6%, the second consecutive losing month.
Seven OPEC+ countries announced plans for additional voluntary production cuts in the first quarter, the sum of which amount to “paper cut” of 896,000 barrels per day, Goldman Sachs said in a note, as the recent upside surprise in the global crude supplies could weigh on oil prices.
“We had already assumed the rollover of the Saudi and Russian cuts into 1Q24, as had most of the market,” said analysts at ING, in a note. “Therefore, new additional cuts of a little under 900Mbbls/d will be seen in 1Q24. These additional voluntary cuts will be brought back gradually to the market after 1Q24 depending on market conditions.”
Markets had been pricing in a larger cut, and the voluntary nature of the reductions has created uncertainty over the actual extent of future supply levels, signaling that the 'OPEC put' is waning.
«The OPEC put is weakening because extra cuts are becoming increasingly difficult to implement,» Goldman Sachs adds, suggesting that «any additional cuts become increasingly difficult to implement.
Still, the cuts, which could lower crude supplies by 700,000 barrels per day in the first half of next year, Goldman Sachs forecasts could support Brent oil prices in the $80 to $100 range in 2024.
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