Oil prices have defied the announcement of extended supply cuts from the OPEC+ alliance with brisk declines.
"There is a sentiment among traders of changing and repositioning their short versus their long positions, and that is how the price movement is actually giving the signals," energy consultant Abdulaziz Almoqbel told CNBC's Dan Murphy on Wednesday. In this case, short positions refer to activity in the futures markets that profits when prices decline, while their opposite long positions cash in when prices move higher over an extended period.
Several OPEC+ members also stretched out 2.2 million barrels per day of additional voluntary cuts from the second quarter of 2024 into the third one, with a view to gradually return these volumes to the market by September 2025 thereafter. Oil prices bowed below $80 barrels per day despite this prospect of market tightness, with the Ice Brent contract with August expiry at $77.59 at 11:14 a.m. London time Wednesday, up 7 cents per barrel from the Tuesday close. The front-month Nymex WTI contract was at $73.28 per barrel, higher by 3 cents per barrel from the Tuesday settlement.
The OPEC+ weekend output strategy decision has so far failed to boost prices, given the voluntary cutters' early announcement of how they plan to reinstate their 2.2 million barrels per day of supplies after the end of the third quarter.
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