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Oil prices rise after bruising losses amid talks of more OPEC+ measures

December 7, 2023 4:10 AM EST

Investing.com-- Oil prices rose in Asian trade on Thursday after tumbling to over five-month lows, as a meeting between Russian and Saudi leaders saw the two discussing more “cooperation” on oil prices.


Russian President Vladimir Putin met with Saudi Crown Prince Mohammed bin Salman this week, with the two reportedly discussing further co-ordination between members of the Organization of Petroleum Exporting Countries and allies (OPEC+).


Putin is also set to meet United Arab Emirates and Iranian leaders this week.


The meetings come just a few days after the OPEC’s new production cuts for 2024 largely underwhelmed markets, sending oil prices into a tailspin. Saudi Arabia and Russia have led the cartel in cutting supply through 2023 to support crude prices.


But the latest OPEC+ meeting showed other member states as less enthusiastic about decreasing production, given that the cuts also eat into national revenue streams. This saw the OPEC+ declare less than 1 million barrels per day of new cuts in 2024, with most of the new cuts also coming as voluntary.


Oil prices had plummeted after the meeting, sinking to their weakest levels since early-July this week. Prices were also pressured by growing concerns over weakening crude demand in the coming months, as global economic conditions deteriorated.


Brent oil futures expiring February rose 0.5% to $74.63 a barrel, while West Texas Intermediate crude futures rose 0.5% to $69.99 a barrel by 20:45 ET (01:45 GMT).


But while the OPEC+ cuts underwhelmed, they are still expected to tighten crude markets marginally in the first quarter of 2024. Analysts expect Brent to trade in the low $80s in early-2024.


Demand concerns remain in play


A string of weak economic readings from Asia, the U.S. and the euro zone pushed up concerns over sluggish crude demand in the coming months.


An underwhelming ADP nonfarm employment report showed that the U.S. labor market was cooling steadily, while an outsized jump in gasoline inventories showed that fuel demand was rapidly declining in the world’s largest fuel consumer.


U.S. Gasoline futures slumped to a near two-year low after the inventory report, which also showed a bigger-than-expected draw in overall crude inventories over the week to Dec. 1.


But U.S. oil production remained largely upbeat, while crude inventories were sitting on six straight weeks of oversized builds.


Markets were now awaiting key oil import data from China, due later in the day. Broader focus was also on U.S. nonfarm payrolls data due this Friday.


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