Oil prices, on Tuesday, December 13, slipped as exuberance over an agreement by major oil producing countries to cut output gave way to doubts about how effective the deal will be.
Brent, the global benchmark, fell 38 cents, or 0.68%, to $55.31 on London’s ICE Futures Exchange. U.S. crude futures dipped 36 cents, or 0.68%, to $52.47 a barrel on the New York Mercantile Exchange.
The commitments by the Organisation of the Petroleum Exporting Countries, OPEC and non-OPEC nations to cut could help speed up the process of bringing oil supply and demand into balance, with the market likely to become undersupplied by the first half of next year if the promised reductions are delivered, the International Energy Agency’s monthly oil report said.
However, the report also showed global oil supplies increased in November to 98.2 million barrels a day as rising OPEC output outweighed a drop in non-OPEC output. OPEC’s production rose 300,000 barrels-a-day last month to a record, even as members were negotiating pledges to cut back. Even Saudi Arabia, which drove the agreement to cut output, produced more, the agency said.
The cartel would now have to cut 1.7 million barrels a day to reach its target ceiling of 32.5 million barrels a day, more than the 1.2 million barrel-a-day cut it initially envisioned.
“There were definitely some bearish nuggets in there that threw cold water on a superheated OPEC story,” said Bob Yawger, director of the futures division of Mizuho Securities USA.
Oil’s move lower comes after an three session winning streak that sent prices to a new one-year high on Monday.
