By Ken Afor
Oil prices dropped on Wednesday morning in Asia due to the murky outlook of OPEC+ production cuts and weakening demand in China.
Brent crude futures dropped by 8 cent, amounting to 0.1%, to $77.12 per barrel by 0101 GMT, while U.S. WTI crude futures went down 13 cent, corresponding to 0.2% decrease, to $72.19 a barrel.
The benchmarks ended their previous session at their lowest level since July 6, and WTI had a decrease in four consecutive days.
The proposed 2.2 million barrel per day cuts to production by the OPEC+ countries for the initial quarter of 2024 have not been able to inject confidence into the market, as doubts linger about the complete implementation of the cuts.
An extension of 1.3 million bpd to the voluntary reductions of Saudi Arabia and Russia are among the cuts.
Comments from Russian deputy prime minister Alexander Novak that OPEC+ was “ready to take additional actions to eliminate speculation and volatility” did not significantly influence market sentiment.
On Wednesday, Vladimir Putin, the President of Russia, is about to travel to essential OPEC countries – Saudi Arabia and the United Arab Emirates – for discussions which are likely to consist of collaboration in relation to the oil industry.
The mood in the stock market has been pessimistic due to worries about the state of China’s economy.
On Tuesday, rating agency Moody’s lowered the outlook on China’s A1 rating to negative from stable, citing “increased risks related to structurally and persistently lower medium-term economic growth and the ongoing downsizing of the property sector”.
On Thursday, China is poised to release initial trade figures, and this set of information will enclose information on oil imports.
On Tuesday, according to numbers from the American Petroleum Institute reported by market sources, the U.S. had an increase in crude oil and fuel stockpiles for the week up to December 1.
The sources informed that the crude stocks augmented by 594,000 barrels, wanting to remain anonymous. It was also revealed that the gasoline stockpiles gained 2.8 million barrels and the distillate inventories increased by almost 1.9 million barrels.
U.S. government data on inventories is due on Wednesday.
