Crude oil adds to losses as OPEC+’s extended output cuts leave market indifferent
Crude oil futures fell on Friday end tallied losses for the week, a day after the decision by OPEC and its allies to further postpone a planned reversal of production cuts failed to ease the outlook for a crude surplus. OPEC+ said Thursday it agreed to again delay the unwinding of 2.2M bbl/day of production cuts, postponing the start of the phaseout from January until April, but the move was expected and crude futures slid lower. Concerns about oversupply and muted global growth remain at the forefront of oil market sentiment, which helps explain the weak reaction to OPEC’s delay in raising output, Fawad Razaqzada of Forex.com said. Although recent Chinese manufacturing data hinted at some recovery, broader demand growth remains tepid, Razaqzada said, adding that “the challenge now lies in whether supply adjustments can offset demand-side weaknesses. The immediate response after the OPEC+ meeting suggests that’s not the case at these prices.” While OPEC’s action “eats quite heavily into the surplus” that was expected during 2025, the “extension and the slower return of barrels is not enough to push the market into deficit next year,” ING commodities strategist Warren Patterson said. The move still leaves the market in surplus in H1 2025, “although admittedly the surplus is more manageable” at ~500K bbl/day, compared to 1M bbl/day previously, according to Patterson. Front-month Nymex crude (CL1:COM) for January delivery ended -1.2% this week to $67.20/bbl, and front-month February Brent (CO1:COM) finished the week -1% to $71.12/bbl; on Friday, the benchmarks fell 1.6% and 1.3% respectively. Front-month January U.S. natural gas (NG1:COM) closed -8.5% for the week to $3.076/MMBtu, after slipping 0.1% on Friday. ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG) Others offered a more optimistic view of OPEC’s action, including analysts at DNB Markets, which said the cartel’s output policy agreement exceeded market expectations in some areas, signaling long-term price support. The headline delay to voluntary production curbs was widely expected, but the unwinding will now take place over 18 months, meaning the future monthly production hike drops to 120K bbl/day from 180K bbl/day, which DNB said indicates that “OPEC+ is accepting that its mission to defend oil prices will drag on much longer than initially expected… While there are frustrations within the group, its members still feel working together to collectively limit production is the best available strategy.” Energy (NYSEARCA:XLE) finished the week -4.7%, at the bottom of the S&P sector standings, and three energy names in the S&P 500 posted new 52-week lows on Friday: Devon Energy (DVN), and Occidental Petroleum (OXY) and APA Corp. (APA) Top 5 gainers in energy and natural resources in the past 5 days: Perpetua Resources (PPTA) +28.4%, TransAlta (TAC) +19.7%, Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (EDN) +16.3%, New Fortress Energy (NFE) +16.3%, Eco Wave Power (WAVE) +14.5%. Top 15 decliners in energy and natural resources in the past 5 days: Nine Energy Service (NINE) -25.7%, Icon Energy (ICON) -19.7%, Contango Ore (CTGO) -18.7%, ProFrac Holding (ACDC) -18.3%, Aemetis (AMTX) -17.8%, KLX Energy Services (KLXE) -17.8%, ASP Isotopes (ASPI) -17.1%, NET Power (NPWR) -16.4%, Texas Pacific Land Trust (TPL) -16.3%, Sable Offshore (SOC) -16.2%, Teekay (TK) -15.3%, Korea Electric Power (KEP) -14.5%, Centrus Energy (LEU) -13.9%, Sigma Lithium (SGML) -13.9%, Nuscale Power (SMR) -13.3%.