OPEC+ Hits the Brakes on Production Boost, But Oil Prices Still in a Slump
New York Oil Prices Close Slightly Lower
New York oil prices closed slightly lower. The intraday increase expanded as major oil-producing countries decided to delay the planned production increase, but the upward trend did not last long.
On the 5th (local time), West Texas Intermediate (WTI) crude oil for October delivery, the nearest month, closed at $69.15 per barrel on the New York Mercantile Exchange, down $0.05 (0.07%) from the previous trading day.
The price of Brent crude oil for November delivery, a global benchmark, closed at $72.69 a barrel, down $0.01 (0.01%) from the previous day.
With the decline, WTI continued its downward trend for four consecutive trading days, hitting its lowest level since December 12, 2023. The decline over the past four trading days amounts to $6.76 per barrel, or 8.91%.
As the downward trend became more evident in the second half of the year, WTI gave up all of its gains this year and entered negative territory. As of today, the year-to-date increase rate for WTI is -3.49%.
According to CNBC in the United States, the Organization of the Petroleum Exporting Countries (OPEC) and major oil producing countries, a consultative body called ‘OPEC+’, decided to postpone the production increase originally scheduled for October by two months.
OPEC+ had planned to reduce production cuts to 180,000 barrels per day starting next month, but will now postpone this until the end of the year.
The 2.2 million barrels per day cut that OPEC+ implemented in the second and third quarters was set to expire at the end of this month. This was not a decision by OPEC+ as a whole, but rather a voluntary decision by eight oil producing countries, including Saudi Arabia and the United Arab Emirates.
Oil prices rose more than 1% during the session on this news, but gave back almost all of the gains as the session progressed.
“There are a lot of factors working against OPEC over the next few months,” said Andy Lippo, president of Lippo Oil Associates. “They would like to see Brent prices in the $85 to $90 range to balance their budget.”
“In China, demand for crude oil is weakening, and in the U.S., the summer driving season is over,” Lee said. “From a consumer standpoint, we are entering a period of declining demand.”
Meanwhile, U.S. crude oil inventories appear to have decreased. According to the U.S. Energy Information Administration (EIA), U.S. crude oil inventories decreased by nearly 7 million barrels in the week ending on the 30th of last month.