Oil prices contracted on Monday amid supply uncertainties following the production cut decision of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, and demand fears in the world’s largest oil consumers, the US and China.
International benchmark crude Brent traded at $78.10 per barrel at 11.07 a.m. local time (0807 GMT), a 0.99% decrease from the closing price of $78.88 a barrel in the previous trading session on Friday.
The American benchmark, West Texas Intermediate (WTI), traded at the same time at $73.37 per barrel, down 0.95% from Friday’s close of $74.07 per barrel.
During the 36th OPEC and non-OPEC ministerial meeting held on Thursday, OPEC+ producers endorsed their previous output cut decisions, which had been agreed to extend until the end of next year.
Soon after the meeting, several members of the group introduced some voluntary cuts individually, most of which were extensions of current output cuts.
Meanwhile, production in the US hit a record high
last month, while the oil rig count continues to rise.
The oil rig count in the US increased by 5 this week, according to the latest data released by oilfield services company Baker Hughes on Friday.
However, experts predict that the OPEC+ group’s output cuts will keep the market tight.
Concerns about an estimated demand weakness in the world’s largest oil consumers, the US and China, also supported downward price movements.
US Federal Reserve Chair Jerome Powell on Friday indicated that lowering interest rates would be “premature” and that more rate hikes may occur in the coming months.
“It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease,” he said in a speech at Spelman College in Atlanta, Georgia.
“We are prepared to tighten policy further if it becomes appropriate to do so,” Powell added.
According to official data released on Thursday, China’s manufacturing activity declined for a second straight month
in November. China’s official Purchasing Managers’ Index (PMI) fell to 49.4, at a quicker pace than expected.
Markets are also closely watching the tension in the Middle East and its possible impact on oil trading routes. The risk of supply disruptions from the region limited the losses.
The Israeli war continues in the Gaza Strip, killing more than 15,500 people, 70% of whom are women and children, while injuries surpass 41,000.
Source: Anadolu Agency