Global oil prices continued to decline on Tuesday, causing more concern for Russia. US crude prices reached their lowest levels since mid-year, hovering at around $72.57 a barrel at 7 am Wednesday, Sydney time, while Brent was trading at approximately $77.40.
Prices briefly increased during early trading when Russia suggested that the OPEC+ group might consider deeper production cuts beyond the current 1.3 million barrels a day, a reduction agreed upon with Saudi Arabia. Russian Deputy Prime Minister Alexander Novak stated that OPEC+ could take additional measures to combat “speculation and volatility” if the existing production cuts proved insufficient.
As a result of this announcement, Brent crude futures rose by 71 cents, or 1%, to $78.74 a barrel, while US West Texas Intermediate crude futures climbed 69 cents, or 1%, to $73.73.
However, doubts resurfaced late in Tuesday’s session regarding the effectiveness of existing OPEC+ cuts, with US WTI futures slipping back below $73 a barrel. Some traders interpreted this as another bluff by OPEC+, as the November 30 statement lacked details about new quotas for all member countries and did not address overproduction issues in some African nations like Nigeria and Angola.
Notably, traders did not discuss Moody’s decision to place China’s credit rating on a negative outlook due to concerns about the impact of the country’s property market crisis on debt, growth, and economic activity. Some oil analysts believe that this issue could gradually affect oil demand expectations for the next year, as Moody’s anticipates a slowdown in China’s growth in 2023 and 2025.
On a positive note, there is optimism that the US economy will avoid a recession next year, experiencing a soft landing instead.