Oil prices fell despite OPEC+'s decision to cut production

2023-12-01 12:16:37
Machine translation
Oil prices fell despite OPEC+'s decision to cut production

Oil prices rose actively in anticipation of OPEC+'s decision to cut production, not reacting to data on the increase in reserves in the United States. However, prices fell 2.5% yesterday, losing the speculative gains of the past two sessions.


OPEC+ countries agreed to cut oil production by 1 million barrels per day by June 2024, but the final data of the new agreement, including national production levels, will be announced by each country individually, and not in a general OPEC communique. Traders decided that this indicated an agreement to voluntarily reduce production, which led to a drop in quotations.


In October, OPEC almost did not change oil production and even increased it by 50,000 barrels/day to 28.08 million barrels/day.


Within OPEC, there is a growing rift between some members, notably Angola, who want to increase production to increase profits. A representative of Angola, Africa's second-largest oil producer, said on Thursday that his country would produce above its quota, meaning it would produce 1.18 million bpd in January against the OPEC quota of 1.11 million bpd. Non-fulfillment of OPEC agreements may lead to a collapse in oil prices, which will further reduce the profits of oil-producing states.


As of November 24, U.S. crude oil inventories rose by 1.61 million barrels, the highest level since July 21, according to the EIA. Inventories in Cushing rose by 1.85 million barrels, the highest since August 25. Diesel inventories rose by 5.22 million barrels to the highest level since October 27, a record increase since 12/02/2022. Crude oil production for the period of November 18-24 remained at a record level of 13.2 million barrels/day.


According to the Bloomberg agency, despite the sanctions, the Russian Federation is increasing oil exports, and during November 20-26, in comparison with the previous week, it increased the supply of oil from Russian ports by 370,000 barrels/day to 3.24 million barrels/day, which is almost a record in recent years 4 months.


Malaysian palm oil futures fell 1.4% for the week to RM3,895/t or $836/t (-2.6% for the fortnight), despite stronger-than-expected November exports that rose compared to October by 2-11% (according to the estimates of surveyors Intertek Testing Services and AmSpec Agri Malaysia). Prices are restrained by low demand from importers.


Indonesia's Ministry of Economy and Trade has raised the base price of crude palm oil from 750.54 to 795.14 $/t and the export duty from 18 to 33 $/t for the period of December 1-15, which will negatively affect sales.

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