Oil prices were broadly steady on Friday following a 2% drop on Thursday, with the market unconvinced that the latest round of production cuts by the OPEC+ coalition will be able to lift prices out of their recent slump.
Brent crude futures for February rose by 1 cent, or 0.01%, to $80.87 a barrel by 1325 GMT on their first day as the front-month ICE Brent contract.
US West Texas Intermediate (WTI) crude futures rose 15 cents, or 0.2%, to $76.11.
OPEC+ producers agreed on Thursday to remove around 2.2 million barrels per day (bpd) of oil from the global market in the first quarter of next year, with the total including a rollover of Saudi Arabia and Russia’s 1.3 million bpd of current voluntary cuts.
OPEC+, which pumps over 40% of the world’s oil, is focusing on reducing output as prices have fallen from about $98 in late September amid concerns over weaker economic growth in 2024.
The market received the news with scepticism and confusion, driven by concerns about compliance given the voluntary nature of the reductions, ongoing macroeconomic headwinds, and investors’ prior expectations of deeper cuts.
The cuts “will not stop a billowing cloud of confusion that is going to take the oil market weeks and months to figure out and only if the self-reporting data is indeed reliable,” PVM analyst John Evans said on Friday.
“The only real hope for long term balance in the market is for a dramatic improvement in global economic data as we start the new year,” Onyx Capital Group chief executive Greg Newman told Reuters on Friday.
“Markets may have been pricing in another larger cut, and it just didn’t meet those expectations,” OANDA analyst Craig Erlam added. Global factory data remained weak in November on poor demand, surveys showed, as the euro zone kept contracting but mixed signals surfaced on the Chinese economy.
Elsewhere, at the two-week COP28 summit in the UAE on Friday, UN Secretary General Antonio Guterres called for a future with no fossil fuel burning at all.
Israel resumed its bombardment of Gaza on Friday after talks to extend a week-long truce broke down.
The risk of conflict spreading to the wider Middle East region had buoyed oil prices after the fighting broke out last month.