Oil prices fall after OPEC+ agreed to voluntary cuts in the first quarter

An aerial view shows a crude oil tanker at an oil terminal off Waidiao Island in Zhoushan, Zhejiang Province, China on January 4, 2023. China Daily via Reuters/File Photo Obtaining licensing rights

  • Brent is heading for a 5% loss in November, and West Texas Intermediate crude falls 6%
  • OPEC+ producers agree to voluntary cuts of about two million barrels per day
  • The cuts include Saudi Arabia and Russia extending the restrictions already imposed
  • Producers ease cuts from the second quarter

November 30 (Reuters) – Oil prices fell by nearly two percent on Thursday after OPEC+ producers agreed to voluntary cuts in oil production in the first quarter of next year, which fell short of market expectations.

Brent crude futures for January delivery fell 27 cents, or 0.3 percent, to $82.83 a barrel by 2:07 p.m. EDT (1907 GMT), with the first-month contract heading toward a five percent loss in November. the second. The January contract expires later Thursday, and the more liquid February contract fell $2.06, or 2.5%, to $80.82.

US West Texas Intermediate crude futures fell $1.96, or 2.5%, to $75.90, and are on track for a 6% loss for the month.

Saudi Arabia, Russia and other members of OPEC+, which pump more than 40% of the world’s oil, agreed to voluntary production cuts approaching two million barrels per day in the first quarter of 2024.

But at least 1.3 million barrels per day of those cuts were an extension of the voluntary restrictions that Saudi Arabia and Russia had already implemented. Earlier, delegates said that the new additional cuts under discussion amount to two million barrels per day.

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“At the moment, the result is not up to expectations… in recent days,” said Calum MacPherson, head of commodities at Investec.

The voluntary nature of the cuts has left investors scratching their heads.

“From what we’ve seen so far, this looks like a paper cut of about 600-700,000 barrels per day versus levels planned for Q4 2023,” FGE’s James Davis said.

He added, “At best, it may be an actual reduction of about 500,000 barrels per day compared to the fourth quarter. This may only be enough to maintain market balance in the first quarter, but it will be soon.”

Saudi Arabia, Russia, Kuwait, Kazakhstan and Algeria were among the producers who said that the cuts would be phased out after the first quarter if market conditions allowed.

The meeting, taking place on the same day that world leaders meet in Dubai for the UN climate conference, was scheduled to take place last week, but was postponed due to disagreements over production quotas for African producers.

OPEC+ also invited Brazil, one of the 10 largest oil producers, to become a member of the group. The country’s energy minister said he hopes to join in January.

Meanwhile, crude oil production in the United States, the world’s largest producer, continued to grow, rising 1.7% in September to a monthly record high of 13.24 million barrels per day, the EIA said.

The Energy Information Administration said that crude production in Texas fell 0.1 percent to 5.57 million barrels per day, the lowest level since July and the first time production in the state has declined since April.

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(Reporting by Laura Sanicola in Washington) Editing by Simon Webb, Lisa Schumaker and Marguerita Choy

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Reports on oil and energy, including refineries, markets and renewable fuels. He previously worked at Euromoney Institutional Investor and CNN.

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