Oil prices continue to fall as the promised Oil and Petroleum Exporting Countries and Allies (OPEC+) cuts fail to buoy prices.
Despite potential support for oil prices from recent OPEC+ production cuts, oil has fallen exponentially since late September.
“We have seen a mild recovery since then, and the next few weeks may be crucial in deciding whether this is just a brief pause before the sell-off since September resumes or an early indication that a bottom of some sort has been reached,” said David Morrison, Senior Market Analyst at FCA.
WTI Crude and Brent Crude were broadly flat at the time of writing on Wednesday.
Brent hit a six-month low last Thursday.
The front-month WTI contract has recently bounced off support in the region of $70 to $67.50.
The agreement reached on November 30 by the OPEC+ involves the producers maintaining existing cuts of 1.3 million barrels per day (bpd). It also includes adding nearly 1 million bpd in new voluntary reductions by other participating nations.
Saudi Arabia and Russia are already implementing domestic production cuts and have been urging other countries to join them. However, Russia continues to maintain strong levels of exports which is weighing on global markets.
“In terms of the demand outlook, orders for Saudi Arabian crude from Chinese refiners are at a multi-month low,” said David Morrison.
“As for tensions across the Middle East,” added David Morrison, “there has been relatively little reaction to several missile and drone attacks on ships in the Red Sea from Houthis in Yemen.”.