Oil Prices Decline as OPEC+ Output Cuts Fall Short of Expectations

1 Dec 2023 , 09:05 AM

Early Asian trade on Friday saw a decline in oil prices, extending the losses incurred after OPEC+ producers reached an agreement on voluntary oil output cuts for the first quarter of the next year. However, these cuts fell short of market expectations.

In this context, Brent crude futures for February experienced a decrease of 14 cents, equivalent to 0.2%, settling at $80.72 a barrel by 0005 GMT. Concurrently, U.S. West Texas Intermediate crude futures also dropped by 12 cents, or 0.2%, reaching $75.84.

The agreement among OPEC+ members, including major oil-producing countries like Saudi Arabia and Russia, involves voluntary output cuts totaling approximately 2.2 million barrels per day (bpd) for the first quarter of 2024.

The market had been anticipating deeper cuts of up to 3 million bpd, leading to the recent decline in oil prices. Analysts believe that the smaller-than-expected output cuts could signal a weakening demand outlook for oil.

Despite the initial drop, oil prices are still up from their lows in November, when Brent crude fell below $80 a barrel for the first time in months. This rebound is attributed to supply disruptions caused by the Russia-Ukraine war and concerns about a potential global recession.

Going forward, oil prices will likely remain volatile, with investors closely monitoring supply and demand dynamics, the global economic outlook, and geopolitical developments.