OIL prices fell to a near five-month low on Tuesday on a stronger US dollar and demand concerns, putting the market down for a fourth day in a row on doubts over Opec+ announced voluntary supply cuts last week.

“The Opec+ deal did little to support prices and given the (four) days of declines that followed it, traders are clearly very unimpressed,” said Craig Erlam, senior market analyst UK & EMEA, at data and analytics firm Oanda.

Brent crude oil futures fell 83 cents, or 1.1 per cent, to settle at US$77.20 a barrel, while US West Texas Intermediate crude (WTI) ended 72 cents, or 1.0 per cent, lower at US$72.32.

That was the lowest close for both crude benchmarks since July 6. For WTI, it was the first time prices fell for four days in a row since May.

The price declines came despite comments from Russia’s Deputy Prime Minister Alexander Novak that Opec+ stands ready to deepen oil production cuts in the first quarter of 2024 to eliminate “speculation and volatility” if existing actions to cut production were not enough.

Opec+ groups the Organization of the Petroleum Exporting Countries and allies such as Russia.

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On Nov 30, Opec+ agreed to voluntary output cuts of about 2.2 million barrels per day (bpd) for the first quarter of 2024. But at least 1.3 million bpd of those cuts were an extension of voluntary curbs Saudi Arabia and Russia already had in place.

“The voluntary element of the deal left the markets questioning whether the supply reduction would actually come into effect,” said Fiona Cincotta, financial market analyst, at US financial services firm StoneX.

The Kremlin said the Opec+ production cuts will take time to kick in. President Vladimir Putin will visit Opec members the United Arab Emirates and Saudi Arabia on Wednesday and host Iranian President Ebrahim Raisi in Moscow on Thursday.

Russia’s oil and gas revenues dropped in November to 961.7 billion roubles (S$14.11 billion) from 1.635 trillion roubles in the previous month due to the cyclical nature of profit-based tax payments.

Top oil exporter Saudi Arabia lowered the price of its flagship Arab Light crude to Asian customers in January for the first time in seven months, reacting to weakening premiums in the physical market amidst supply overhang concerns.

Opec member Libya’s National Oil Corporation, meanwhile, said it was on track to grow oil output to 2 million bpd in the next three to five years.

Demand concerns

In China, the world’s biggest oil importer, major state-owned banks were busy buying the yuan to prevent it from weakening too much after rating agency Moody’s cut China’s outlook to negative.

Elsewhere, countries at the COP28 climate conference are considering calling for a formal phase-out of fossil fuels as part of the United Nation summit’s final deal to tackle global warming.

The US dollar rose to a two-week high against a basket of currencies after fresh employment data showed job openings dropped in October to the lowest level since early 2021.

The slowing labour market and subsiding inflation have raised optimism that the Federal Reserve is probably done raising interest rates this cycle, with financial markets anticipating a rate cut in mid-2024.

A stronger dollar can reduce oil demand by making the fuel more expensive for buyers using other currencies.

Lower interest rates, meanwhile, could increase oil demand by making it cheaper for consumers to borrow money to purchase more goods and services. REUTERS