Oil Holds Losses As Market Fails To Shake Off Post-OPEC+ Gloom

(Bloomberg) -- Oil held a run of declines — after failing to sustain an early gain — amid continuing skepticism that the latest OPEC+ supply cuts will turn the market tide.

Global benchmark Brent slipped near $78 a barrel after a six-week losing run, while West Texas Intermediate was below $74. 

The drop came as markets continued to flash short-term weakness. Nearby timespreads were waning, indicating oversupply, even after OPEC+ ministers last week said the group will continue to curb output. European crude markets — which help set benchmark prices — are facing a supply glut due to a combination of weak regional crude demand and an influx of cargoes from the US. 

Oil just posted back-to-back monthly declines as supplies from non-OPEC countries ballooned, while the outlook for demand growth softened. A meeting of the Organization of Petroleum Exporting Countries and its allies last week saw delay and internal wrangling, causing some to doubt the group’s pledged supply cuts. Prices have softened even as wider markets wager that the US Federal Reserve is done hiking interest rates. 

“Soft price action since the OPEC+ meeting is reflective of an investor cohort that remains perplexed on how to deploy risk,” RBC analysts including Michael Tran and Helima Croft said in a report. “The near-term path of least resistance is lower, given the degree of ambiguity and lack of catalysts. Oil has become a ‘show me’ type market.”

In the Middle East, meanwhile, Iranian-backed Houthi rebels claimed they targeted two Israeli ships in the Red Sea, part of a series of attacks against commercial vessels in international waters amid the war in Gaza. The US said one of its destroyers shot down three drones.

There are also fresh risks from Venezuela. The White House is evaluating the potential consequences after the country failed to release detained Americans by a late-November deadline. The country also held a referendum over the weekend on whether a part of neighboring Guayana’s oil-rich territory should be ruled from Caracas. 

--With assistance from Yongchang Chin.

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