Crude oil fell on Thursday as investors weighed the supply outlook after the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) delayed its planned output increase by three months to April 2025, with Brent going down by 22 cents or 0.3 per cent to trade at $72.09 a barrel and the US West Texas Intermediate (WTI) depleting by 24 cents or 0.35 per cent to finish at $68.30 a barrel.
OPEC+ had been planning to start unwinding cuts from October 2024 and after a meeting on Thursday, it agreed to extend the 2 million barrels per day and the 1.65 million barrels per day of cuts until the end of 2026 from the end of 2025 respectively.
Under its formal output strategy, the broader OPEC+ coalition is now restricting its combined production to 39.725 million barrels per day until December 31, 2026, after previously only applying this quota throughout 2025.
Eight OPEC+ members will now extend their 2.2 million barrels per day voluntary production decline into the first quarter and will begin hiking production incrementally between April and September 2026.
The alliance pumps around half of the world’s supply, but market analysts noted that the market is facing a surplus from non-OPEC producers.
So, while there is no shortage of oil, there is no positive sign of what to look forward to in the future to rally prices.
Cooling US Dollar provided some some support for oil prices, as it makes prices cheaper for holders of other currencies.
There are high expectations that the Federal Reserve will cut interest rates this month, a move that will further ease the Dollar’s strength and support the oil market.
Market analysts also warned that the oil market will now shift focus to the actions of US President-elect Donald Trump, who when he takes office on January 20, could impose new sanctions on Iran, and tariffs on China and has pledged an end to the Russia-Ukraine war.
Israel said on Tuesday it would return to war with Hezbollah if their ceasefire collapses and its attacks would go deeper into Lebanon and target the state itself.
Meanwhile, Donald Trump’s Middle East envoy has travelled to Qatar and Israel to kick-start the US president-elect’s diplomatic push to help reach a Gaza ceasefire and hostage release deal before he takes office.