Closing the session on December 5, Brent and WTI oil prices both decreased by more than 1%, reaching a 5-month low. WTI alone lost value for the 4th consecutive session. This morning, the prices of these two types of oil are still fluctuating around yesterday's closing mark, at 77 USD and 72 USD per barrel, respectively.
Prices went down because the market doubted that members of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) would comply with their cut commitments. During last week's meeting, OPEC+ announced that it would reduce production by 2.2 million barrels a day in the first quarter of 2024.
Brent oil price developments since the beginning of this year. Chart: Bloomberg
OPEC+ is focusing on reducing production as oil prices have dropped nearly 20% since the end of September. Besides, economic growth next year is forecast to weaken and global oil supply may be surplus.
Crude oil prices have dropped a few more dollars since OPEC+ announced the cuts. Comments by Russian Deputy Prime Minister Alexander Novak that OPEC+ "is ready to do more to reduce speculation and volatility" have not had a strong impact on market psychology.
Russian President Vladimir Putin will this week visit key countries in OPEC, Saudi Arabia and the UAE. The content of the meetings is expected to revolve around cooperation in the oil market.
Another reason why the market went down yesterday was concerns about demand in China. This economy has shown many signs of slowing down in the past few months. On December 7, China will release more trade data, including crude oil imports.
In the US, gasoline and crude oil inventories also increased in the last week of November. Accordingly, oil inventories increased by 594,000 barrels, while gasoline increased by 2.8 million barrels.
Ha Thu (according to Reuters)
