Brent crude price fell to $74 per barrel on Wednesday, December 6, trading at $74.35 per barrel.
Experts observed that the decrease in prices of Brent crude and West Texas Intermediate (WTI) benchmarks occurred due to an imbalance between the amount of oil available and the amount buyers want.
According to Reuters, Dennis Kissler, senior vice president of trading at BOK Financial, pointed out that there’s a decrease in demand for fuel.
Currently, the market is more concerned about lower demand rather than the availability of oil. Additionally, recent reports indicated that gasoline reserves in the United States surged by 5.4 million barrels last week, surpassing analysts’ expectations of a 1 million-barrel increase.
A Reuters survey has noted that in November 2023, OPEC (Organization of the Petroleum Exporting Countries) experienced a decrease in its crude oil production, marking the first drop since July 2023. This decline was primarily due to reduced shipments from Nigeria and Iraq, according to a monthly Reuters survey released on Wednesday.
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The survey revealed that OPEC collectively produced about 27.81 million barrels per day (bpd) of crude oil last month. This represented a decrease of 90,000 bpd compared to the production in October. The data was gathered from sources within OPEC, consultants, and companies tracking vessel movements.
Before November, OPEC’s oil production had remained steady or increased over the previous three months. This was due to heightened supply from African members and Iran, offsetting lower output from other sources.
According to the survey, Iran, which is not subject to the OPEC production cuts, notably boosted its output to a level not seen in five years.
However, the oil production from the 10 OPEC members part of the OPEC+ agreement reduced by 130,000 bpd in November compared to October.
Meanwhile, Saudi Arabia and other Middle Eastern countries maintained strong compliance with their announced production cuts, even implementing additional voluntary reductions, contributing to this decline.
OPEC+ had previously announced 2.2 million bpd of cuts for the first quarter of 2024, but these include Saudi Arabia rolling over its voluntary cut, Russia deepening crude and fuel export cuts by 200,000 bpd, and several other OPEC+ members announcing voluntary production reductions for the first quarter of 2024.
Meanwhile, Saudi and Russian officials said on Tuesday, that the cuts could be extended or deepened beyond March 2024.