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Crude oil prices slipped again Monday after falling for five straight weeks – oil’s longest weekly losing streak since the end of 2021 – as traders weighed the potential for further production cuts by OPEC+ at the group’s delayed meeting later this week.
Oil failed to hold early gains after Bloomberg reported Saudi Arabia is asking others in the OPEC+ coalition to reduce their oil production quotas in a bid to boost global markets, but some members are resisting.
The Saudis, which have been making largely unilateral supply cuts of 1M bbl/day since July, are now seeking further support from across the cartel and its partners, according to the report.
The group already was forced to delay its policy meeting by four days to November 30 as Angola and Nigeria resisted reductions to their own quota limits for 2024, which were set out at the previous conference in June.
Front-month WTI crude (CL1:COM) for January delivery settled -0.9% to $74.86/bbl, the lowest since November 16, and January Brent crude (CO1:COM) closed -0.7% to $79.98/bbl, the fourth straight daily decline for both benchmarks.
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“With fundamentals softening and market sentiment bearish, OPEC+ may need to announce another formal cut,” Eurasia Group analysts said, and if the group fails to unveil an additional 1M bbl/day cut on top of an extension of the Saudi voluntary measure, “the risk is that the $80/bbl floor that has largely held so far will shift downward to the mid or even low $70s.”
The delay in this week’s OPEC meeting “will make the group’s market management task more difficult in the short term, not least because it raises questions about the group’s cohesion,” Eurasia said.