OIL prices fell on Monday (Dec 4) as traders took a wait-and-see attitude about plans by the Organization of the Petroleum Exporting Countries (Opec) and its allies to cut production in the first quarter of 2024.

Market analysts said fears of a drop in demand also put pressure on prices.

Brent crude futures settled down 85 US cents, or 1.08 per cent, at US$78.03 a barrel. US West Texas Intermediate crude futures finished down US$1.03, or 1.39 per cent, at US$73.04.

“They’re probably catching their breath after last week’s Opec+ meeting,” Andrew Lipow, president of Lipow Oil Associates, said of crude traders on Monday. “The market has decided (Opec production plans) are not going to have that much of an impact. It’s more style over substance.”

Opec+ announced production cuts that are voluntary in nature, raising doubts about whether or not producers would fully implement them. Investors were also unsure about how the cuts would be measured.

Traders over the past five months have waited to see if cuts in production as well as predicted changes in demand would come to fruition, said Zane Curry, vice president of markets and research for Mobius Risk Group.

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“We’ve become Missouri, the Show-Me state,” Curry said.

Monday’s fall adds to a 2 per cent decline last week after the supply cuts announced on Thursday by Opec and allies including Russia, together known as Opec+.

“The Opec+ ‘deal’ last week was unconvincing to say the least,” said Craig Erlam, analyst at brokerage Oanda. “And with markets seemingly anticipating more of an economic slowdown next year, the announcement simply doesn’t go far enough.”

Surveys on Friday showed global manufacturing activity remained weak in November on soft demand, with eurozone factory activity contracting, while there were mixed signs on the strength of China’s economy.

Elsewhere, Western countries have stepped up efforts to enforce the US$60 a barrel price cap on seaborne shipments of Russian oil imposed to punish Moscow for its war in Ukraine.

Washington on Friday imposed additional sanctions on three entities and three oil tankers. REUTERS