Oil futures: Crude extends losses into fifth session, tests 5-month lows

Quantum Commodity Intelligence – Crude oil futures Wednesday were again struggling, having hit fresh five-month lows as reverberations from the indecisive OPEC+ meeting continued to be felt across oil markets.

Front-month Feb24 ICE Brent futures were trading at $74.42/b (1650 GMT), close to the day's low and compared to Tuesday's settle of $77.20/b. Last week, Brent traded at a high of $84.61/b prior to the OPEC+ meeting.

At the same time Jan24 NYMEX WTI was trading at $69.39/b versus Tuesday's settle of $72.32/b.

A late selloff in the previous session had sunk prices for a fourth consecutive day, extending into a fifth session, with investors unconvinced that OPEC+ can deliver on promised cuts despite assurance from Saudi Arabia that the group can deliver.

"While the OPEC+ deal flagged a headline 2.2 million bpd of cuts in the first quarter, this included 1.3 million bpd of voluntary cuts from Saudi Arabia and Russia in place since July. Investors were also skeptical about the balance of the announced cuts, given the voluntary nature of the package of reductions," said Carsten Fritsch of Commerzbank.

Comments from Saudi Arabia's energy minister that he expects the cuts to be fully implemented and possibly extended briefly stabilised prices earlier this week, but ultimately, the voluntary nature of the cuts left markets unconvinced about implementing the reductions.

Concerns also remain over demand growth, with Commerzbank's Fritsch adding: "The fact that OPEC+ keeps having to further reduce its supply also raises questions about whether demand is in fact developing as robustly as OPEC claimed in its monthly report."

China

Sentiment was not helped after Moody's cut its outlook for Chinese sovereign bonds to negative, while China's state assets supervisor warned over broader financial risks with the property sector burdened by overwhelming debts.

Latest US inventory data from the EIA's weekly Petroleum Status Report did little to resuscitate prices despite a 4.6 million barrel draw in crude inventories, which was offset by the 5.4 million barrel build in gasoline stocks.

Earlier, latest data from the American Petroleum Institute weighed on prices with crude inventories increasing 600,000 barrels, missing expectations for a 2 million barrel draw. Gasoline stocks were also up 2.83 million barrels and distillate stocks increased nearly 900,000 barrels to complete an across-the-barrel build.