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Crude oil futures traded lower on Friday morning as the market was disappointed with the voluntary production output cuts announced by OPEC (Organisation of the Petroleum Exporting Countries) and its allies, known as OPEC+.
At 9.53 am on Friday, February Brent oil futures were at $80.62, down by 0.30 per cent; and January crude oil futures on WTI (West Texas Intermediate) were at $75.87, down by 0.12 per cent.
December crude oil futures were trading at ₹6,337 on Multi Commodity Exchange (MCX) in the initial trading hour of Friday morning against the previous close of ₹6,407, down by 1.09 per cent; and January futures were trading at ₹6360 as against the previous close of ₹6,436, down by 1.18 per cent.
As reported earlier, the ministerial meeting of OPEC+ members was rescheduled from November 26 to November 30 following the reported disagreements over the production output cuts by some member countries.
Rather than distributing the production output cuts among the member countries, OPEC+ meeting on November 30 announced further voluntary cuts of around 2.2 million barrels a day during first quarter of 2024 among eight members.
Of the 2.2 million barrels of voluntary production output cuts, 1 million barrels a day was the extension of Saudi Arabia’s existing production output cut, and Russia’s 500,000 barrels a day (from the existing 300,000 barrels a day) cut. The extension of production output cut by Saudi Arabia and Russia was expected by the market.
This made the effective additional voluntary output cuts to be in the range of around 900,000 barrels a day in the first quarter of 2024.
“A concern for the market is the fact that these announced cuts were voluntary rather than OPEC+ wide cuts. These voluntary cuts suggest that it is becoming difficult for members to agree on OPEC+ cuts. Therefore, if further action is needed in future, it will become increasingly difficult for the group to respond,” Warren Patterson said in Commodities Feed of ING Think on Friday.
One of the key issues in the lead-up to the OPEC+ meeting was the production quotas set for Angola and Nigeria earlier this year. These countries were not happy with their lower output target for 2024, he said.
Following an independent assessment of what these countries would be capable of producing next year, Nigeria’s production target was raised from 1.38 million barrels a day to 1.5 million barrels a day. However, Angola’s target was cut further from 1.28 million barrels a day to 1.11 million barrels a day. Angola has said it will not follow its new quota and will pump at 1.18 million barrels a day from January, ING Think’s Commodities Feed said.
December natural gas futures were trading at ₹234.10 on MCX in the initial trading hour of Friday morning against the previous close of ₹234.90, down by 0.34 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), December guarseed contracts were trading at ₹5657 in the initial trading hour of Friday morning against the previous close of ₹5645, up by 0.21 per cent.
December jeera futures were trading at ₹44,000 on NCDEX in the initial trading hour of Friday morning against the previous close of ₹44,610, down by 1.37 per cent.
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