Oil prices fell in Asian morning trading, as markets continue to doubt the effect of OPEC+ cuts and take cues from a worsening demand outlook in China.
Futures on Brent crude dropped 8 cents, or 0.1%, to USD 77.12 a barrel. At USD 72.19 per barrel, US WTI crude futures were down 13 cents, or 0.2%. In the previous session, both benchmarks closed at their lowest points since July 6.
The Organisation of the Petroleum Exporting Countries (OPEC+) and its allies, including Russia, have agreed to voluntary output cuts of roughly 2.2 million barrels per day (bpd) for the first quarter of 2024. However, the cuts have not been able to buoy market sentiment because there is uncertainty about whether they will be carried out in full.
The voluntary 1.3 million bpd reductions from Saudi Arabia and Russia are included in the cuts.
Market sentiment was not greatly affected by remarks made by Russian Deputy Prime Minister Alexander Novak, who stated that OPEC+ was “ready to take additional actions to eliminate speculation and volatility.”
Vladimir Putin, the president of Russia, is scheduled to visit Saudi Arabia and the United Arab Emirates soon.
The agenda of the talks is expected to include discussions about cooperation in the oil market. Fears regarding the state of China’s economy have also contributed to the bearish sentiment.
The outlook for China’s A1 rating was downgraded from stable to negative by rating agency Moody’s due to “increased risks related to structurally and persistently lower medium-term economic growth and the ongoing downsizing of the property sector.”
China will release preliminary trade data to the public, including information on crude oil imports.
According to market sources citing data from the American Petroleum Institute, crude oil and fuel inventories increased in the US in the week leading up to December 1.
Crude stocks rose by 594,000 barrels, distillate inventories increased by almost 1.9 million barrels, and gasoline stockpiles increased by 2.8 million barrels.