Oil prices are heading for a decline for the seventh consecutive week in the longest series of weekly declines in 5 years due to concerns about excess supply and weak Chinese demand (the second largest economy in the world), despite the rise in prices after Saudi Arabia and Russia pressured OPEC Plus members to join the production cuts.
Brent crude futures for the nearest delivery rose $1.62, or 2.19%, to $75.69, at the time of preparing this report, and US West Texas Intermediate crude rose $1.64, or 2.37%, to $70.97.
But Brent has fallen by 3.93% since last Monday, the first session of the week, at the time of preparing the report, and US crude oil has also lost 4.46% of its value.
The two benchmarks fell to their lowest levels since late June in the previous session, a sign that many traders believe the market is oversupplied, but there are expectations of higher prices later.
Reuters quoted Tamas Varga, from the oil brokerage firm BVM, as writing in a note that OPEC Plus’ position is “weak,” as he described it, in providing support for crude prices in addition to the record high US production and the slowdown in China’s oil imports. It can only mean one thing: there is plenty of oil available, which is reflected in falling prices.
Yesterday, Saudi Arabia and Russia (the world’s largest oil exporters) called on all OPEC Plus members to join the voluntary production cut for the benefit of the global economy, just days after a meeting that did not result in a mandatory cut for the alliance of crude producers.
But several countries from the coalition consisting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, led by Russia, successively announced a voluntary reduction of 2.2 million barrels per day in the first quarter of next year.
Doubts
Chief crude oil analyst at Kpler, Victor Katona, says that despite pledges by OPEC Plus members to reduce production, some members of the alliance may not comply due to unclear quota baselines and dependence on oil and gas revenues.
Chinese customs data, which fueled the market decline, revealed that its crude imports in November fell by 9% on an annual basis, as high inventory levels, weak economic indicators, and slowing demand from independent refineries weakened demand.
Data from the US Energy Information Administration showed the day before yesterday that production in the United States remained near record high levels of more than 13 million barrels per day.
