- The West Texas Intermediate (WTI) crude for January delivery fell by 0.7%, closing at $71.78 a barrel on the New York Mercantile Exchange.
- Meanwhile, February Brent crude, the global benchmark, dropped by 0.8%, settling at $76.60 a barrel on ICE Futures Europe.
Oil futures have experienced consistent downward pressure in recent sessions following the announcement of additional production cuts by OPEC+ (Organization of the Petroleum Exporting Countries and its allies). These cuts, however, have failed to generate substantial optimism among traders.
According to Ricardo Evangelista, senior analyst at ActivTrades, “Investors remain relatively unmoved by the potential impact that the additional voluntary production cuts agreed by the OPEC+ members will have on the market.” He further notes that concerns over an economic slowdown and its impact on demand have dominated market sentiment, with Brent prices dropping over 6% since the end of November.
Despite these challenges, industry data indicating a rise in U.S. crude supplies adds to the bearish sentiment surrounding oil futures. The market will likely continue to closely monitor developments as the downward trend persists.
OPEC+ Producers Agree to Crude Cuts in Q1 2022
OPEC+ producers have reached an agreement to voluntarily reduce crude oil production by approximately 2.2 million barrels per day (mbd) in the first quarter of next year. This includes an anticipated extension of Saudi Arabia’s voluntary output cut of 1 mbd and Russia’s reduction of crude exports by 300,000 barrels per day.
However, the voluntary nature of these cuts has raised doubts among traders regarding compliance, according to analysts.
U.S. Crude Inventories Rise, Inventory Report Expected
The American Petroleum Institute recently reported that U.S. crude inventories increased by 594,000 barrels last week, citing a source familiar with the data. The Energy Information Administration is scheduled to release the official inventory data on Wednesday.
Analysts surveyed by S&P Global Commodity Insights have projected a decline of 4.1 million barrels in domestic commercial crude stockpiles for the week ending December 1st. Additionally, they anticipate weekly increases of 800,000 barrels each for gasoline and distillate supplies.