ALBAWABA – Oil prices slid Monday as ambiguity shrouded the Organization of Petroleum Exporting Countries and its allies’ (OPEC+) decision to enact additional output cuts, while the US Dollar struggled to pare some of its previous losses.
OPEC+ reportedly reached an initial agreement to introduce an additional one million barrel per day (bpd) cut, on top of the mandatory one million barrel per day cut enacted earlier this year.
That is in addition to the voluntary cuts by Saudi Arabia and Russia, which the two countries announced would carry into 2024, all to bolster oil prices.
However, the decision will go to a vote, as several African country members were hesitant to sign off on the decision.
Futures of both crude benchmarks were down 0.6 percent by 0406 GMT, according to Reuters, while OPEC Basket futures were up 1.32 percent, as reported by OilPrice.com.
Brent crude futures were down $0.49, to $78.39 a barrel, and West Texas Intermediate (WTI) crude futures were at $73.65 a barrel, down $0.42.
Meanwhile, prompt Brent and WTI traded at $78.5 and $73.75 a barrel, respectively, down $0.38 and $0.32 per barrel. Whereas prompt OPEC Basket traded at $85.
Oil prices rise on weaker US dollar - Shutterstock
As for the US dollar, markets were pricing in a 60% chance of a rate cut by the March meeting compared with 21% just over a week ago, according to the CME's FedWatch tool.
Notably, lowering the interest rate will weaken the US dollar.
The US dollar index, which tracks the currency against six major counterparts, picked up slightly to 103.33 in Asian afternoon trading, but is still not far from Friday's low close.
Bloomberg’s US dollar index spot was up 0.14 percent by 1339 Amman Time, at 103.4100.
Oil prices slumped more than 2 percent last week on investor scepticism about the depth of supply cuts by OPEC+, coupled with concerns about sluggish global manufacturing activity.
A rally on Thursday drove prices up on hopes that the meeting will deliver a decision by end of day, but failure to do so has suspended the market in wait for OPEC+’s decision. In the meantime, an even marginally strengthening US dollar does not help oil prices.
