Brent Slumps to $78 on Negative Market Sentiment
Crude oil prices slid early on Monday due to a negative market sentiment that followed the Organisation of Petroleum Exporting Countries (OPEC) and allies’ (OPEC+) production cut.
Oil market sentiment remains negative this morning, with both Brent and WTI futures trading almost 1% lower after the announcement from the OPEC+ meeting failed to convince the market about a tighter oil balance in the immediate term, ING commodities strategists said in a note.
Pessimism over compliance with the new deal remains one of the major concerns for the market for now, analysts said in the note. ICE Brent lost about 1% to $78.10 per barrel from the closing price of $78.88 a barrel in the previous trading session on Friday.
The American benchmark, West Texas Intermediate (WTI), traded at the same time at $73.37 per barrel, down 0.95% from Friday’s close of $74.07 per barrel.
During the 36th OPEC and non-OPEC ministerial meeting held on Thursday, OPEC+ producers endorsed their previous output cut decisions, which had been agreed to extend until the end of next year.
Soon after the meeting, several members of the group introduced some voluntary cuts individually, most of which were extensions of current output cuts. Meanwhile, production in the US hit a record high last month, while the oil rig count continues to rise.
Initial data shows that OPEC crude oil production dropped to around 28.05 million barrels per day (mbpd) in November 2023 compared to 28.19Mbpd in October 2023, according to a Bloomberg survey.
The BBG survey estimates that supply from Iraq and Nigeria dropped by 50mbpd each, while Iran and Kuwait also lowered production by 40mbpd each. Higher production from Saudi Arabia and Libya helped offset some of the production losses for the month.
Weekly data from Baker Hughes shows that the US added five oil rigs over the last week, taking the total oil rig count to 505, whilst the gas rigs fell by 1, taking the total rig count (oil & and gas combined) to 625 for the week ended 1 December.
US oil rigs have now increased to their highest level in nearly two months, although the recent weakness in oil prices could weigh on further rig additions over the coming weeks. Naira Steadies as Banks Issue Update on FX Purchase
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