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U.S. crude oil surrendered early gains and tumbled more than 2% Thursday, even after OPEC+ announced some member nations agreed to voluntary cuts approaching 2M bbl/day starting in January, as Bloomberg said traders were disappointed by the smaller than expected cuts and lack of details on quota enforcement.
But at least 1.3M bbl/day of the cuts were an extension of the voluntary reductions that Saudi Arabia and Russia already had in place, after delegates had said new additional cuts under discussion totaled as much as 2M bbl/day.
The voluntary nature of the cuts also sparked skepticism over whether they will actually be delivered.
Angola already rejected its new output target, saying it will continue pumping as it was previously; it remains to be seen whether other OPEC+ members will follow through on their commitments.
“What the market was hoping for was a unified voice on agreed-upon cuts. Instead, what we apparently are getting is a series of individual Saudi-lite voluntary cuts,” CFRA analyst Stewart Glickman said.
OPEC’s biggest news may have been the addition of Brazil, which is set to raise output to 3.8M bbl/day next year but will not be part of this round of production cuts.
Front-month Nymex crude (CL1:COM) for January delivery closed -2.4% Thursday to $75.96/bbl, while January Brent crude (CO1:COM) settled -0.3% to $82.83/bbl; for the month, WTI fell 6.2% and Brent dropped 5.2%.
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Meanwhile, emphasizing the difficulty of OPEC’s objectives, the U.S. reported its crude output continued to grow, increasing 1.7% in September to a monthly record 13.24M bbl/day, the Energy Information Administration said.