Oil down more than $1 as Angola exits OPEC cartel over production quotas; Brent drops to $78/bbl

Brent crude futures were down $1.30, or 1.63 per cent, to $78.40 a barrel, while US West Texas Intermediate crude was lower by $1.19, or 1.60 per cent, at $73.03, according to news agency Reuters. 

Also Read: Year 2023 | From $82 to near $100 and back: How Brent crude moved in 2023 over OPEC+ cuts and more

Both crude benchmarks had settled higher on Wednesday for a third straight session, with investors worrying about trade disruptions as major maritime carriers chose to steer clear of the Red Sea route, with longer distances increasing transport and insurance costs.

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a January 19 expiry, was last trading lower by 0.92 per cent at ₹6,117 per bbl, having swung between ₹6053 and ₹6,224 per bbl during the session so far, against a previous close of ₹6,174 per barrel.

What’s weighing on crude oil prices?

-At a meeting in November, Angola had protested a decision by OPEC to cut its production quota for 2024. Angola’s oil production is around 1.1 million barrels per day (bpd), according to Reuters.

-Analysts said that from an oil market supply perspective, the impact is minimal as oil production in Angola was on a downward trend and higher production would first require higher investments. However, prices still fell on concern of the unity of OPEC as a group.

-Oil prices had been relatively stable from yesterday’s levels prior to the news out of Angola, with Brent trading near $80 a barrel, as investors balanced higher inventories and record output in the US with jitters over global trade disruptions in the Red Sea.

-The US Energy Information Administration (EIA) said on Wednesday that US crude inventories rose by 2.9 million barrels in the week to December 15 to 443.7 million barrels, compared with analysts’ expectations in a Reuters poll for a drop of 2.3 million barrels. The EIA said US crude output rose to a record 13.3 million bpd last week, up from the previous all-time high of 13.2 million bpd.

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Published: 21 Dec 2023, 10:30 PM IST