By Georgina McCartney
HOUSTON (Reuters) -Oil prices fell on Thursday as investors weighed the ample supply outlook for next year against OPEC+, which postponed a planned production increase by three months to April 2025.
fell 22 cents, or 0.3%, to $72.09 a barrel, while the U.S. West Texas Intermediate (WTI) fell 24 cents, or 0.35%, to $68.30 a barrel.
OPEC+, the Organization of the Petroleum Exporting Countries plus allies including Russia, had planned to start phasing out cuts from October 2024, but slowing global demand and booming production outside the group forced the organization to cancel plans several times to postpone.
“There were questions at the meeting about whether there was cohesion or not (under OPEC+), they are certainly coming out of this unit, but this also shows the challenging supply landscape they have in front of them as they try to support this market .” says John Kilduff, partner at Again Capital in New York.
The gradual unwinding of cuts of 2.2 million barrels per day will begin from April next year with monthly increases of 138,000 barrels per day, according to Reuters calculations, and will last 18 months until September 2026. OPEC+ will pump about half of the world’s oil.
“The overall signal to the market is constructive and is likely to prevent price declines in the near term,” Mukesh Sahdev, the global head of oil commodity markets at Rystad Energy, said in a note on Thursday.
But analysts pointed to ample supply prospects for 2025, offsetting support from Thursday’s OPEC+ decision.
“The market is facing a glut, there’s no shortage of oil and there’s not really a blinking sign of what we can expect in the future to drive prices higher,” said Bob Yawger, director of Energy Futures at Mizuho (NYSE:).
Meanwhile, a cooling US dollar provided some support on Thursday. And expectations that the Federal Reserve will cut rates this month will further soften the dollar’s strength and support the oil market, StoneX energy analyst Alex Hodes said in a note Thursday.
A stronger dollar makes dollar oil more expensive for investors holding other currencies, hurting demand.
In the Middle East, Israel said Tuesday it would go to war again with Hezbollah if their ceasefire collapses and attacks penetrate deeper into Lebanon and target the state itself.
Meanwhile, Donald Trump’s Middle East envoy has traveled to Qatar and Israel to boost the new US president’s diplomatic push for an agreement on a ceasefire and the release of hostages in Gaza before he takes office on January 20, a source briefed on the talks said. Reuters.
