Oil prices fell more than 2 percent on Friday as investors doubted the depth of OPEC+ supply cuts and concerns about sluggish global production activity.
February Brent crude oil futures fell $1.98, or 2.45%, to $78.88 per barrel. West Texas Intermediate (WTI) oil futures fell $1.89, or 2.49%, to $74.07 a barrel.
On a weekly basis, Brent recorded a decline of approximately 2.1%, while WTI lost more than 1.9%.
OPEC+ producers agreed on Thursday to remove about 2.2 million barrels per day (bpd) of oil from the global market in the first quarter of next year. This total includes the rollover of Saudi Arabia and Russia’s 1.3 million bpd of current voluntary cuts.
However, investors are somewhat skeptical of the announcement, neither accepting that members will comply nor seeing it as enough.
OPEC+, which pumps more than 40 percent of the world’s oil, sees fit to further reduce production after prices collapsed from around $98 per barrel in late September due to concerns about the impact of low economic growth on fuel demand.
The cuts agreed by OPEC+ on Thursday are voluntary, so there has been no definitive revision to OPEC+’s production targets. There is some doubt as to whether manufacturers will fully implement them and also on what basis the deductions will be measured.
US Fed Chairman Jerome Powell said on Friday that the central bank would act “carefully” on interest rates.
U.S. manufacturing remained weak in November and factory employment fell, surveys show. Surveys showed investors are closely monitoring global manufacturing activity, which remained weak throughout the month due to weak demand.
The Israel-Hamas war restarts after a week-long ceasefire. The conflict had initially supported oil prices amid concerns that surrounding oil producers risked getting involved, disrupting supplies. So far the conflict has not had a significant impact on global oil flows.
On the supply side, the United States imposed additional sanctions on Friday targeting three entities and three oil tankers related to the price ceiling imposed on Russian oil.
U.S. oil rigs rose by 5 this week to 505, the highest level since September, energy services company Baker Hughes said in a closely watched report on Friday.
