February 23, 2024

Oil declined for the third straight session as persistent skepticism about the effectiveness of OPEC+ supply cuts overshadowed multiple bullish developments.

West Texas Intermediate slid 1.4% to settle near $73 a barrel, following a six-week run of losses. Prices briefly rose after Saudi Energy Minister Prince Abdulaziz bin Salman told Bloomberg that the kingdom’s output curbs could “absolutely” continue past March, though the gain rapidly faded, highlighting the market’s pessimism.

“The near-term path of least resistance is lower, given the degree of ambiguity and lack of catalysts,” Royal Bank of Canada analysts Michael Tran and Helima Croft said in a report. “Oil has become a ‘show me’ type market.”

Oil has posted back-to-back monthly declines as supplies from outside the OPEC production cartel ballooned, while the outlook for demand growth softened. Markets are continuing to flash short-term weakness, with nearby timespreads indicating oversupply. Last week’s meeting of the Organization of Petroleum Exporting Countries and its allies saw delay and internal wrangling, causing some to doubt the group’s pledged supply curbs.

Prices:

  • WTI for January delivery retreated 1.4% to settle at $73.04 a barrel in New York.
  • Brent for February settlement fell 1.1% to settle at $78.03 a barrel.

Still, the market got some support on Monday after US Deputy Energy Secretary David Turk said the country is taking advantage of low prices to refill its strategic reserve as much as it can. But those efforts are limited by logistical constraints, Turk said in a Bloomberg Television interview.

There are also fresh risks to supplies from Venezuela, with the White House evaluating the potential consequences after the country failed to release detained Americans by a late-November deadline.

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