Oil futures finished Tuesday at their lowest since July, with skepticism over the ability of OPEC+ to deliver on additional production cuts early next year prompting prices to extend their streak of declines into a fourth straight session.
Price action
-
West Texas Intermediate crude for January delivery
CL00,
+2.30% CL.1,
+2.30% CLF24
fell 72 cents, or 1%, to settle at $72.32 a barrel on the New York Mercantile Exchange. -
February Brent crude
BRN00,
+1.65% BRNG24,
the global benchmark, declined by 83 cents, or 1.1%, at $77.20 a barrel on ICE Futures Europe. Brent and WTI crude futures settled at their lowest since July 6, according to Dow Jones Market Data. -
January gasoline
RBF24
tacked shed 1.1% to $2.11 a gallon, while January heating oil
HOF24
fell 0.7% to $2.64 a gallon. -
Natural gas for January delivery
NGF24
settled at $2.71 per million British thermal units, up 0.6%.
Market drivers
“The OPEC+ decision was a clear disappointment last week due to both the underwhelming amount of additional [oil] output curbs and the voluntary nature of the 2024 policy cuts,” said Tyler Richey, co-editor at Sevens Report Research.
Prince Abdulaziz bin Salman, Saudi Arabia’s energy minister, said this week that OPEC+ production cuts can “absolutely” continue past the first quarter if needed, Bloomberg reported on Monday.
“The market didn’t buy it, however, as the bears are pressing OPEC+ for more clarity on the long-term outlook for policy plans and reassurance that the group is willing to do ‘whatever it takes’ to keep oil near or above $80/barrel,” Richey told MarketWatch on Tuesday.
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Meanwhile, David Turk, U.S. deputy energy secretary told Bloomberg TV Monday that the U.S. is refilling the SPR as much as it can — it has been for the last several months and at current prices, it’ll keep doing that.
Crude prices ended last week with back-to-back losses after OPEC+ producers on Thursday agreed to voluntarily cut around 2.2 million barrels a day (mbd) of crude from the market in the first quarter of next year, a figure that included a widely expected extension of Saudi Arabia’s 1 mbd voluntary output cut and Russia’s 300,000 barrel a day cut to crude exports.
The voluntary nature of the overall cuts left traders skeptical over whether producers will comply, analysts said. Remarks by Saudi Arabia’s energy minister on Monday signaling that the first-quarter cuts could be extended offered little lasting support.
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“Looking ahead, the price action in oil has become increasingly heavy, and if there is not some sort of positive or bullish market catalyst ahead, we are likely to see a test of the 2023 lows in the $67/barrel area” for WTI, analysts at Sevens Report Research wrote in a Tuesday note.
Weekly data from the Energy Information Administration on U.S. petroleum supplies will be released Wednesday.
On average, analysts polled by S&P Global Commodity Insights expect the report, covering the week ended Dec. 1, to show a decline of 4.1 million barrels in domestic commercial crude stockpiles. They also forecast weekly supply increases of 800,000 barrels each for gasoline and distillate supplies.
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