Oil prices fall more than 2pc as investors skeptical of OPEC+ cuts

block

Reuters :
Oil prices slumped more than 2 percent on Friday on investor skepticism about the depth of OPEC+ supply cuts and concern about sluggish global manufacturing activity.
Brent crude futures for February settled down $1.98, or 2.45 percent, at $78.88 a barrel.
US West Texas Intermediate crude futures (WTI) dropped $1.89, or 2.49 percent, to $74.07 a barrel. For the week, Brent posted a decline of about 2.1 percent, while WTI lost more than 1.9 percent.
OPEC+ producers agreed on Thursday to remove around 2.2 million barrels per day (bpd) of oil from the global market in the first quarter of next year, with the total including a rollover of Saudi Arabia and Russia’s 1.3 million bpd of current voluntary cuts.
Traders viewed the announcement with some skepticism, OANDA analyst Craig Erlam said. “(It) seems traders either aren’t buying that members will be compliant or don’t view it as being sufficient,” Erlam added.
OPEC+, which pumps more than 40 percent of the world’s oil, is reducing output after prices fell from about $98 a barrel in late September on concerns about the impact of sluggish economic growth on fuel demand.
The cuts “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,” PVM analyst John Evans said.
The cuts agreed by OPEC+ on Thursday are voluntary, so there was no collective revision of OPEC+ production targets. The voluntary nature of the cuts led to some skepticism about whether or not producers would fully implement them, and also from what basis the cuts would be measured.
In the United States, Federal Reserve Chair Jerome Powell said on Friday that the central bank would move “carefully” on interest rates as risks of “under- and over-tightening are becoming balanced.”