Oil Prices Fall as OPEC+ Delays Output Increase, Ample Supply Outlook Cited
Oil prices declined on Thursday, weighed down by an ample supply outlook for next year and OPEC+’s decision to delay its planned output increase. West Texas Intermediate (WTI) settled down 0.35% at $68.30 a barrel, while Brent crude oil fell 0.3% to $72.09 a barrel.
OPEC+, the Organization of the Petroleum Exporting Countries plus allies including Russia, had planned to start unwinding cuts from October 2024, but slowing global demand and booming production outside the group forced it to postpone the plans. The gradual unwinding of 2.2 million barrels per day (bpd) of cuts will now start from April 2025, with monthly increases of 138,000 bpd, and last 18 months until September 2026.
Analysts noted that the OPEC+ decision is unlikely to stimulate prices in the short term, as the market is facing a surplus and there is no shortage of oil. However, the decision is seen as a positive development in the long term, as it signals that the world is moving towards a more balanced supply scenario.
The strength of the US dollar, which makes dollar-denominated oil more expensive for investors holding other currencies, continues to weigh on demand. The Federal Reserve’s expected rate cut this month is also expected to ease the strength of the dollar, providing some support to the oil market.