The OPEC+ group’s latest attempt to boost global oil prices collapsed within a day of its announcement on Thursday. On Friday, US West Texas Intermediate (WTI) crude hit its lowest level since June 2023, marking its worst week in nearly a year. The postponement of OPEC+ production increases confirmed a dimmer outlook for crude than many had anticipated.
WTI crude fell to a low of $US67.17 earlier in the session and ended the week at $US68.17, shedding 7.45% for its worst week since October. The Brent global benchmark dropped 9.8% at one point on Friday, though after-hours trading reduced the weekly loss to 7.25%, with the price ending at $US71.47 a barrel.
OPEC+ delayed plans to increase production by 180,000 barrels per day until December, as oil prices have steeply declined since July.
The planned output hike would bring about 2.2 million barrels per day back onto the market by the end of next year—if it materialises.
These additional barrels could return to the market as oil demand slows in China, where the world’s largest crude importer is rapidly transitioning to electric vehicles.
Baker Hughes reported on Friday that the number of active US oil rigs for the week ending September 6 remained unchanged at 483, slightly above the 2.5-year low of 477 rigs recorded in the week ending July 19.
The number of US oil rigs has decreased over the past year, down from a 4-year high of 627 rigs in December 2022.
US petrol futures weakened again on Friday, reaching a new 33-month low.
Weaker-than-expected global economic news on Friday heightened concerns about energy demand, further weighing on crude prices.
In addition, Saudi Arabia’s decision to cut crude prices for Asian customers in October signalled weak demand, which negatively impacted oil prices.
State-owned Saudi Aramco reduced oil prices for Asian customers by between 70 US cents and $US1.30 per barrel for October delivery, reflecting waning energy demand and creating a bearish outlook for crude.
Friday’s global economic news was also bearish for energy demand and crude prices. Alongside a weaker-than-expected US jobs report, eurozone Q2 GDP was revised down to +0.2% quarter-on-quarter from the previously reported +0.3%. Additionally, Germany’s industrial production for July fell by -2.4% month-on-month, far below expectations of a -0.5% decline. Japan’s household spending in July rose just +0.1% year-on-year, compared to expectations of a +1.2% increase.