Oil prices edge down as extended OPEC+ supply cuts highlight weak demand
Shafaq News/ Oil prices edged lower on Friday, with weak demand in focusafter the OPEC+ group postponed planned supply increases and extended deepoutput cuts to the end of 2026.
Brent crude futures fell 6 cents, or 0.1%, to $72.03 per barrel by 0336GMT. U.S. West Texas Intermediate crude futures lost 1 cent to $68.29 perbarrel.
For the week, Brent was on track to drop more than 1%, while WTI hung onto a marginal 0.1% gain.
The Organization of the Petroleum Exporting Countries and its allies onThursday pushed back the start of oil output rises by three months until Apriland extended the full unwinding of cuts by a year until the end of 2026.
The group, known as OPEC+ and responsible for about half of the world's oiloutput, was planning to start unwinding cuts from October 2024, but a slowdownin global demand - especially in China - and rising output elsewhere haveforced it to postpone the plan several times.
"Sidelining the surprise drawdown in US crude stockpiles last weekand OPEC+ extending plans to ramp up output until September 2026, oil priceseased further amid growing concerns over dented global demand and oversuppliedmarkets," said Priyanka Sachdeva, senior market analyst at Phillip Nova.
"With growing concerns over global demand for oil in 2025, even thesoftening of the US Dollar in the last couple of sessions doesn’t seem to mendthe floor beneath oil prices," she said.
The latest extension puts OPEC+ output below major banks' previousforecasts, which could provide some support for the market going forward,analysts at energy-focused consultancy FGE said.
However, concerns that supply will still outstrip demand even going intonext year weighed on prices further.
Macquarie analysts modeled Saudi Arabian oil production remaining in thelow-9 million bpd range in 2025, but expected that even with that supplydiscipline the market would be oversupplied by more than 1 million bpd.
"Looking into next year, we forecast a heavy surplus, as non-OPECsupply growth is anticipated to meet the below-trend demand growth, loweringthe call on OPEC supply and limiting the need for OPEC+ to reverse voluntarycuts," they said in a client note.
Markets were also looking out for the U.S. nonfarm payrolls report duelater on Friday, to see whether it would support expectations of a rate cut atthe U.S. Federal Reserve's next meeting.
The market is pricing in a 72% chance that the Fed will deliver a25-basis-point rate cut when it meets on Dec. 17-18, up from 66.5% a week ago,CME FedWatch tool showed.
Clarity on rate cuts from the next Fed policy meeting might feed intodemand forecasts for oil in 2025, said Phillip Nova's Sachdeva.
(Reuters)
