Oil prices on Tuesday, December 6, dropped for the first time in a week since the Organisation of Petroleum Exporting Countries, OPEC, agreed to cut output.
After rising over 15 percent over the four sessions since the Nov. 30 OPEC meeting, Brent futures lost $1.01, or 1.8 percent, to settle at $53.93 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 86 cents, or 1.7 percent, to $50.93 per barrel, Reuters reports.
“Prices fell for the first day in five in reaction to news that OPEC’s output hit a record high last month,” said James Williams, president of energy consultant WTRG Economics in Arkansas.
OPEC would probably do a “pretty good job” in January of keeping to the quotas they agreed to last week but would probably start cheating on those quotas in February or March, Williams said.
The Cartel’s output set another record high in November, rising to 34.19 million barrels per day (bpd) from 33.82 million bpd in October, according to a Reuters survey.
As part of last week’s decision, OPEC said major oil producers outside the group would cut 600,000 bpd of production on top of OPEC’s 1.2 million bpd reduction. Those countries and OPEC meet this weekend to finalize the terms.
Russia reported average oil production in November of 11.21 million bpd, its highest in nearly 30 years. That means OPEC and Russia alone produced enough to cover almost half of global oil demand, which is just above 95 million bpd.
Market watchers had said OPEC’s decision to cut output marked an about-face for Saudi Arabia, which has been battling to keep market share for the past two years by selling more, if cheaper, barrels rather than bolstering prices.
