Oil prices fall after OPEC+ extends supply cuts
2024.12.05 22:05
Investing.com– Oil prices fell in Asian trade on Friday and were set for a middling week after the OPEC+ extended its current run of supply cuts until well into 2025, highlighting increased concerns over slowing demand.
Oil’s middling weekly performance also came after mixed U.S. inventory data pushed up concerns over slowing demand going into the winter season. But traders kept some risk premium in the market as tensions between Israel and Hezbollah remained high despite a recent ceasefire.
expiring in February fell 0.4% to $71.80 a barrel, while West Texas Intermediate crude futures fell 0.4% to $67.67 a barrel by 20:57 ET (01:57 GMT). Both contracts were set to end the week mostly unchanged.
OPEC+ extends supply cuts to April
The Organization of Petroleum Exporting Countries and allies, including Russia (OPEC+), agreed to extend its current run of supply cuts until April 2025, during a meeting on Thursday.
The cartel only plans to begin raising output slightly in April, and will keep supply cuts in place until the end of 2026.
The OPEC+ had initially planned to begin increasing production from October 2024, but had then repeatedly postponed the move as oil prices tumbled on softening demand, especially in top importer China.
The cartel had also repeatedly cut its demand growth forecasts for 2024 and 2025.
Thursday’s move, while presenting a tighter outlook for crude markets in 2025, also saw traders fretting over worsening demand. While the OPEC+ does produce about half of global oil supplies, it has faced increasing competition from production in non-member states, especially the U.S.
U.S. oil production remained near record highs of 13 million barrels per day in recent months, and is expected to increase under incoming President Donald Trump.
Trump has also vowed trade tariffs on China, which could dent the economy and further undermine crude demand.
ANZ analysts noted increased electric vehicle adoption in China also weighed on fuel demand.
Oil markets brace for economic data barrage
Oil traders also kept away from making big bets before a barrage of economic readings in the coming days.
U.S. data is due later on Friday and is likely to factor into the outlook for interest rates.
Next (LON:) week, Chinese inflation and trade data for November is on tap, as is the Central Economic Work Conference, which is expected to offer more cues on the world’s biggest oil importer.
U.S. is also due next week.
