Adedapo Adesanya
By Adedapo Adesanya
The prices of the crude oil benchmarks, Brent and the West Texas Intermediate (WTI) fell to a near five-month low on Tuesday on a stronger US Dollar and demand concerns.
According to data obtained by Business Post, Brent futures went down by 83 cents or 1.1 per cent to $77.20 a barrel and WTI weakened by 72 cents or 1.0 per cent to $72.32 per barrel.
The prices were the lowest for both crude benchmarks since July 6. This put the market down for a fourth day in a row on doubts over voluntary supply cuts announced by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) last week.
The fall in prices came despite comments from Russian Deputy Prime Minister, Mr Alexander Novak, that OPEC+ stands ready to deepen oil production cuts in the first quarter of 2024 to eliminate “speculation and volatility” if existing actions to cut production were not enough.
On November 30, OPEC+ agreed to voluntary output cuts of about 2.2 million barrels per day for the first quarter of 2024. But at least 1.3 million barrels per day of those cuts were an extension of voluntary curbs Saudi Arabia and Russia already had in place.
Analysts noted that the voluntary element of the deal left the markets questioning whether the supply reduction would come into effect.
Meanwhile, President Vladimir Putin will visit OPEC members – the United Arab Emirates (UAE) and Saudi Arabia – on Wednesday and host Iranian President Ebrahim Raisi in Moscow on Thursday. This development is coming after the Russian government said the OPEC+ production cuts will take time to kick in.
Top OPEC exporter Saudi Arabia lowered the price of its flagship Arab Light crude to Asian customers in January for the first time in seven months, reacting to weakening premiums in the physical market amidst supply overhang concerns.
OPEC member Libya’s National Oil Corporation, meanwhile, said it was on track to grow oil output to 2 million barrels per day in the next three to five years.
Crude oil inventories in the US rose this week by 594,000 barrels for the week ending December 1, according to The American Petroleum Institute (API), after an 817,000-barrel draw in crude inventories in the week prior.
The official data from the US Energy Information Administration (EIA) will be published later on Wednesday.
Elsewhere, countries at the COP28 climate conference are considering calling for a formal phase-out of fossil fuels as part of the United Nations summit’s final deal to tackle global warming.
The US Dollar rose to a two-week high against a basket of currencies after fresh employment data showed job openings dropped in October to the lowest level since early 2021.
