OPEC+ Struggles to Stem Crude Oil Trading Decline as Chinese Economy Adds to Worries
In a significant downturn, U.S. crude oil prices dropped by 4% on Wednesday, reaching their lowest level since late June. The West Texas Intermediate (WTI) contract for January settled at $69.38 a barrel, while the Brent contract for February closed at $74.30 a barrel. This decline, continuing for five consecutive days, occurs despite OPEC+ efforts to boost prices through promised supply cuts.
The ongoing decline in oil prices is primarily attributed to growing global economic uncertainties, with particular concerns about the Chinese economy. Moody’s recent downgrade of China’s government credit rating to negative has amplified apprehensions about a potential economic slowdown.
Retail Gasoline Prices Mirror Oil Profit
In the U.S., falling oil prices have led to the lowest retail gasoline prices since January. As of Wednesday, the average price of gasoline was $3.22 a gallon, mirroring the downward trend in oil prices.
Despite OPEC+ members’ assurances of implementing supply cuts in the coming year, the market remains sceptical. The group faces challenges in stabilizing oil prices, with doubts persisting about the efficacy of their proposed cuts in the volatile global economic climate.
Mixed Signals from U.S. Data
Adding to the uncertainty, U.S. data present mixed signals about crude and gasoline inventories. According to the Energy Information Agency, U.S. crude inventories fell by 4.6 million barrels for the week ending December 1, while gasoline inventories unexpectedly rose by 5.4 million barrels. This conflicting data contributes to the unpredictability of crude oil trading prices.
As the global economy contends with these uncertainties and OPEC+ attempts to restore market stability, the energy market remains watchful, with stakeholders closely monitoring developments for potential shifts in oil pricing dynamics.