US crude oil rates drop as OPEC postpones meeting

(MENAFN) On Wednesday, U.S. crude oil rates experienced a decline following the postponement of a crucial meeting by the Organization of Petroleum Exporting Countries (OPEC) regarding production cuts originally scheduled for the weekend.

The West Texas Intermediate contract for January initially dropped by approximately 5 percent to USD73.85 per barrel in the morning but recovered most of those losses.

Eventually, U.S. crude settled at USD77.10 per barrel, reflecting a decrease of 67 cents or 0.86 percent. The Brent contract for January also saw a decline, falling 49 cents or 0.59 percent to settle at USD81.96 per barrel.

OPEC announced that the meeting of energy ministers would be delayed until the following Thursday without providing a specific reason.

Reports suggest that Saudi Arabia is facing challenges persuading Angola and Nigeria to agree to lower output targets, contributing to the delay.

Traders had been anticipating potential additional production cuts by OPEC and its allies, collectively known as OPEC+. This anticipation had driven prices higher towards the end of the previous week and early in the current week.

However, the implementation of such cuts poses a significant challenge for OPEC+ due to concerns about member countries adhering to their production quotas, with many having an incentive to exceed them, according to Tamas Varga, an analyst with PVM Oil Associates.

“Compliance will be weak going forward,” Varga stated. He referred to Russia above all, which has to put money into its conflict with Ukraine

Oil prices sharply declined since September highs due to record non-OPEC production and ongoing concerns about demand in China, marked by a six-month consecutive drop in exports.

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