Oil prices remained weak on Friday, putting them on track for six consecutive weeks of slump as the voluntary production cuts agreed by the Organization of the Petroleum Exporting Countries (OPEC) and members underwhelmed.
Brent crude oil futures expiring in February were down 0.14% to $80.75 per barrel, having lost 2.4% in the earlier session. The US West Texas Intermediate (WTI) expiring in January declined 0.11% to $75.88 per barrel, but later rise to trade 0.05% higher at $76.00 per barrel.
The global benchmark was trading at levels below the close in the previous week, although losses in the US benchmark have eased, allowing it to trade a tad higher than levels posted last Friday.
The OPEC and its allies, including Russia, collectively known as OPEC+, are making efforts to cut output as oil prices have dropped from around $98 in late September amid a weaker economic outlook for next year and the possibility of a supply surplus.
The OPEC+ coalition accounts for more than 40% of global oil.
Voluntary OPEC+ Output Cuts Fall Short of Expectations
Saudi Arabia, Russia, and other producers within OPEC+ reached a new agreement on Thursday to voluntarily reduce supplies by another 900,000 barrels per day (bpd) from January.
The additional curbs were pledged on top of the continued 1.3 million bpd reductions from Saudi Arabia and Russia. It also includes 200,000 bpd of fuel shipment cuts from Russia, with the remaining amount being split between the six members.
Still, crude prices slipped as traders expressed uncertainty over the potential of the cuts being fully implemented.
Market players were cautious about how far the countries would keep to the voluntary curbs. At the end of the OPEC+ meeting, Angola rejected its lower output target, stating that it would continue pumping at current levels.
Vandana Hari, a founder of a Singapore-based global energy market intelligence provider, said the assembly’s outcome offered no clarity, citing the voluntary supply reductions as one of the reasons for the disappointment.
Whether the 900,000 bpd of extra curbs are executed in the first quarter has yet to be observed, according to Hari.
