The effectiveness of OPEC+’s voluntary production cuts is in doubt as crude oil futures closed down for four consecutive days and hit a new low since July. The market is skeptical about OPEC+’s ability to achieve additional production cuts early next year, leading to uncertainty and a decline in prices.
West Texas Intermediate crude oil futures for January delivery fell 72 cents to settle at $72.32 a barrel, while global benchmark Brent crude oil futures on ICE Futures Europe fell 83 cents to $77.20 a barrel – their lowest levels since July 6. The voluntary nature of the overall production cuts has left traders skeptical that producers will comply, with the market pressuring OPEC+ for more clarity on the long-term outlook for its policy plans.
Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman mentioned that OPEC+ production cuts could continue beyond the first quarter if needed, but this has provided little lasting support to oil prices. The Energy Information Administration is expected to release weekly data on U.S. oil supplies, with analysts forecasting a draw in domestic crude inventories and an increase in gasoline and distillate supplies.
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