Adedapo Adesanya
By Adedapo Adesanya
Prices of crude oil went down by more than 4 percent at the international market on Friday as a result of reports which fuelled doubt that the extension on production cut that is expected to be made at next week’s meeting of the Organization of Oil Exporting Countries (OPEC) may not follow through.
As a result of this, major futures depreciated from gains gathered during the month of November. By implication, Brent crude, the international benchmark which traded up to $64 during the week, fell by 4.39 percent as it shed $2.78 to trade at $60.49 per barrel.
Likewise, the US West Texas Intermediate (WTI) crude lost 4.63 percent equivalent to $2.69 to close at $55.42 per barrel.
The report from Bloomberg suggested that Saudi Arabia will probably indicate that it’s no longer willing to compensate for excessive production by other members of OPEC.
It is to be recalled that the oil cartel and its allies, including Russia, had earlier in the year agreed to cut combined oil output by 1.2 million barrels per day that will run till March 2020.
The oil market had looked at expectations for the group to possibly extend production cut agreements beyond March to June 2020 when the body meets in Vienna on December 5 and 6 and this had driven oil prices to their highest since September following the attacks on the Aramco oil fields.
Also, contributing to this state of oil was the resignation announcement by Iraq’s prime minister after weeks of deadly protests that had seen oil prices gain, with this, oil may remain bearish.
On the trade deal front, the move by the US President Trump to sign into law the Human Rights and Democracy Act in favor of Hong Kong did not sit well China and this may cause a stir for a market that has been influenced by the actions of the sixteen-month long war between the world’s largest economy.
