Oil Prices Decline but Still Near 12-Week High on OPEC+ Cuts

Oil prices fell in Asia but are still almost 12-week highs after OPEC and its allies agreed to bigger production cuts than expected.

U.S. Crude Oil WTI Futures dropped 0.5% to $58.91. Also, International Brent Oil Futures fell 0.3% to $64.19.

During their meeting on Friday, Saudi Arabia agreed to give 400,000 bpd of their cuts if OPEC+ total its part of 1.7 million bpd through the first quarter of 2020. It is an important supply cut beyond the agreement with OPEC+ members. Also, Crude prices increased, with the U.S. WTI surging 7.35 on the week. It was WTI’s largest weekly increase since mid-June. Besides, U.K. Brent increased by 3.1% in the week.

OPEC and its allies’ strategy will change to manage short-term physical imbalances. Goldman Sachs surged its 2020 Brent forecast following the move.

Oil prices dropped today as data showed exports in China cut for the fourth-month. It raised concerns that demand for oil might fall.

The data came as Beijing and Washington target to reach an initial deal that remained subtle ahead of a Dec. 15 deadline.

An economist at Oversea-Chinese Banking Corp said the soft Chinese counts outweighed the OPEC+ cuts, reinforcing the heavy focus on demand at present. Also, there is a bit of fear in the market with just a week left before a new set of U.S. tariffs come in.

Energy services firm said that the U.S. drill count dropped in the week to Dec. 6 — the seventh week of cuts.

Drilling firms cut five oil rigs, leaving an average of 661, the lowest since April 2017.

Oil Prices Fell; Weak China Exports Focuses on Trade War Impact

Oil prices dropped after data showed China’s total exports of products and services fall for a fourth straight month. It sent shivers through a market already concerned about the loss down to global demand by the U.S.-China trade war.

Brent futures fell 21 cents, or 0.3%, at $64.18 per barrel. It gained about 3% last week on the news that OPEC+ would deepen output cuts.

WTI Oil Futures settled down 28 cents or 0.47% to $58.92. It rose about 7% last week on the prospects for lower output from OPEC+, including Russia.

Monday’s sudden chill came after customs data showed that exports from China dropped 1.1% from a year earlier. This is a sharp reversal from expectations for a 1% increase in a poll.

The United States and China trade obstructed global growth and oil demand showing how deep jitters are embedded in the market. The weak start of the week came despite data showing China’s crude imports hopped to a record.

Washington and Beijing have been trying to agree with a trade deal that will end tit-for-tat tariffs. Contrarily, talks dragged on for months as they argue over key details.

The price decrease also put an end to a strong run in recent sessions fueled by hopes for the OPEC+ output curb deal.

On Friday, producers agreed to deepen their cuts from 1.2 million bpd to 1.7 million bpd, showing about 1.7% of global output.

ING Economics said the announcement came constructive after Saudi Arabia said it would produce about 400,000 bpd below its new quota level.

Still, U.S. output increased since the OPEC+ cuts first introduce in 2017 trying to drain a supply glut that long weighed on prices, American production rose even as the drill count fell, reflecting more effective well contraction.