More than 2% decline in oil prices as investors question OPEC+ cuts

 More than 2% decline in oil prices as investors question OPEC+ cuts

More than 2% decline in oil prices as investors question OPEC+ cuts

Oil prices dropped by more than 2% on Friday as investors continued to have doubts about the production curbs by OPEC+ and expressed concern about the slowdown in global manufacturing.

Oil prices dropped by more than 2% on Friday as investors continued to have doubts about the production curbs by OPEC+ and expressed concern about the slowdown in global manufacturing.

Due to market uncertainty on the extent of OPEC+ supply cutbacks and worries about slowing global industrial activity, oil prices dropped by more than 2% on Friday.

February's Brent oil futures dropped 1.98, or 2.45%, to close at $78.88 a barrel.

The price of a barrel of US West Texas Intermediate (WTI) oil dropped $1.89, or 2.49%, to $74.07.

WTI declined for over 1.9% for the week, while Brent fell by almost 2.1%.

In addition to Saudi Arabia and Russia's present voluntary cuts of 1.3 million barrels per day (bpd), OPEC+ producers decided on Thursday to reduce an additional 2.2 million bpd of oil from the world market in the first quarter of 2019.

According to OANDA analyst Craig Erlam, traders were a little skeptical about the statement.

"It seems like merchants apparently aren't buying that members will comply else don't think it's enough," Erlam said.

More than 40% of the world's oil supply is supplied by OPEC+, which is reducing production in response to worries about the effect of slowing economic growth on fuel consumption, which caused prices to drop to roughly $98 per barrel in late September.

"The cuts will not stop the cloud of misinformation that will take the oil market multiple weeks and months to figure out, particularly if the self-reporting data is actually dependable," John Evans, an analyst with PVM, said.

There was no collective adjustment to OPEC+ output objectives since the cutbacks that were agreed upon by the group on Thursday are optional. Because the deduction was optional, there was significant uncertainty about whether manufacturers would completely implement it and how the reduction would be calculated.

Chairman of the Federal Reserve in the United States, Jerome Powell, said on Friday that the bank would adjust interest rates "cautiously" as the risks of "less and more tightening" are beginning to balance.

A poll found that industrial employment fell and US manufacturing was weak in November.

According to surveys, investors were monitoring the world manufacturing sector, which remained poor throughout the month as a result of low demand.

Fighting in Gaza resumed on Friday after negotiations to prolong a one-week truce between Israel and the militant Palestinian organization Hamas broke down. Due to early fears that any rise associated with neighboring oil fields may disrupt supply, the fighting had boosted oil prices. Global oil flows have not been significantly impacted by the war so far.

Regarding supplies, the United States targeted three organizations and three oil ships with new price cap-related penalties on Russian oil on Friday.

US oil rig counts increased by five to 505 this week, the highest number since September, according to a detailed report released by energy services company Baker Hughes on Friday. [RIG/U]

Speaking on Friday at the two-week COP28 conference in the United Arab Emirates, UN Secretary-General Antonio Guterres advocated for a future in which fossil fuels are never used.

In the week leading up to November 28, money managers' net long holdings in US crude futures and options decreased by 7,663 contracts, to 62,070, according to a report released on Friday by the US Commodity Futures Trading Commission (CFTC).