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Oil Prices Drop to 5-month Low

Wed 06 Dec 2023 | 09:54 PM
Oil Prices Plunge after Federal Reserve Rate Hike
Oil Prices Plunge after Federal Reserve Rate Hike
Taarek Refaat

Oil prices continued to decline, Wednesday, for the fifth session, touching their lowest levels since the beginning of July, following the rise in US exports and doubts about the ability of the “OPEC+” organization to implement the planned production cuts, which raised concerns about a glut in supply.

Brent crude contracts fell near $76 per barrel after falling by more than 7% during the previous four sessions.

It is worth noting that US crude shipments are approaching a record level of 6 million barrels, according to estimates by companies tracking shipments, which indicates the extent of the impact of the abundance of US supply on global oil markets.

Crude oil prices have declined since the Organization of the Petroleum Exporting Countries and its allies announced, last Thursday, further production cuts, which clarified market doubts about the extent of the organization’s members’ commitment to the voluntary reduction.

Oil futures fell by about a quarter from their peak in late September on concerns that increased production from outside the organization will outpace demand growth.

Bloomberg explained that the Kingdom of Saudi Arabia's reduction in official selling prices for Asia to their lowest levels since February reflects weak prices.

It is noteworthy that the production cut is still less than expected, which may prompt some Asian buyers to obtain their needs from other places, taking into account that they will receive fewer shipments from Saudi Arabia in January.

In another sign of increased supply, the American Petroleum Institute announced that inventories across the United States rose last week, according to sources familiar with the data. Official data on US oil inventories will be released later today.

While Alexander Novak, Russian Deputy Prime Minister, said that OPEC+ may take further measures unless last week's agreement is sufficient to achieve balance in the market.