Oil prices set for sixth straight weekly fall as OPEC+ cuts underwhelm

Oil prices extended losses on Friday, and looked set for a sixth straight week of declines, as voluntary oil output cuts agreed by OPEC+ producers fell short of market expectations.

Brent crude futures for February fell 39 cents, or 0.5%, to US$80.47 a barrel by 0345 GMT. U.S. West Texas Intermediate crude futures fell 23 cents, or 0.3%, to US$75.73.

Brent prices were trading at levels lower than last week’s close, but WTI pared some losses to trade slightly higher than last Friday’s level.

OPEC+, which pumps over 40% of the world’s oil, is focusing on reducing output as prices have fallen from about $98 in late September amid concerns over weaker economic growth in 2024 and expectations of a supply surplus.

Saudi Arabia, Russia and other members of OPEC+ agreed to voluntary output reduction of 900,000 bpd in addition to extending 1.3 million bpd in production cuts already in place. Delegates had earlier discussed as much as 2 million bpd in new output curbs.

Goldman Sachs said its December forecast for Brent was “moderately tilted” to the downside of its previously estimated range, calling the oil producers’ move a “temporary response,” and “difficult to implement.”

“The market had started to price in a large probability of extra cuts, including a potential longer-lasting and official non-voluntary cut,” Goldman said in a note on Friday but kept its 2024 price outlook due to an expected slowdown in U.S. supply growth and low OPEC supply.

Saudi Arabia, Russia, the UAE, Iraq, Kuwait, Kazakhstan and Algeria were among producers who said cuts, which amounted to 2.2 million bpd in total, will be unwound gradually after the first quarter, market conditions permitting.

Separately, Brazil said on Thursday it would join the OPEC+ next year, though such a move wouldn’t bind south America’s largest country to production cuts.