Oil prices stabilise after slump on underwhelming OPEC+ cuts

An aerial view shows oil tanks of Transneft oil pipeline operator at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia June 13, 2022. REUTERS/Tatiana Meel/File Photo Acquire Licensing Rights

NEW YORK, Dec 1 (Reuters) – Oil prices were stable on Friday following a 2% drop the prior day, as the market kept a wary eye on the latest round of OPEC+ production cuts.

Brent crude futures for February rose by 32 cents, or 0.4%, to $81.18 a barrel by 12:46 p.m. (1746 GMT) on their first day as the front-month contract.

U.S. West Texas Intermediate crude futures (WTI) rose 33 cents, or 0.43%, to $76.29.

Both benchmarks were on track to post weekly gains, with WTI set to rise about 1.3% and Brent 1%.

OPEC+ producers agreed on Thursday to remove around 2.2 million barrels per day (bpd) of oil from the global market in the first quarter of next year, with the total including a rollover of Saudi Arabia and Russia’s 1.3 million bpd of current voluntary cuts.

Traders viewed the announcement with some skepticism, OANDA analyst Craig Erlam said.

“(It) seems traders either aren’t buying that members will be compliant or don’t view it as being sufficient,” he said.

OPEC+, which pumps over 40% of the world’s oil, is focusing on reducing output as prices have fallen from about $98 in late September amid concerns over weaker economic growth in 2024.

The cuts “will not stop a billowing cloud of confusion that is going to take the oil market weeks and months to figure out and only if the self-reporting data is indeed reliable,” PVM analyst John Evans said.

In the United States, Federal Reserve Chair Jerome Powell said on Friday that the central bank would move “carefully” on interest rates as risks of “under- and over-tightening are becoming balanced”.

Meanwhile, Chicago Federal Reserve Bank President Austan Goolsbee said on Friday he believes U.S. inflation is on track for the Fed’s 2% target.

U.S. manufacturing remained subdued and factory employment fell in November, according to a survey.

Investors are keeping a watchful eye on global manufacturing activity, which remained weak during the month on poor demand, surveys showed.

On Friday, talks to extend a week-long truce between Israel and Palestinian militant group Hamas collapsed on Friday, prompting a resumption in the war in Gaza which could lead to disruption in global oil supply.

Also on the supply side, the U.S. on Friday imposed additional sanctions related to the price cap on Russian oil, targeting three entities and three oil tankers.

Elsewhere, at the two-week COP28 summit in the UAE on Friday, U.N. Secretary General Antonio Guterres called for a future with no fossil fuel burning at all.

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